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Understanding the Push to Restore the Full Gambling Loss Deduction: A Guide to the FAIR BET Act and What It Means for Taxpayers

By jili tutorial · September 16, 2026

Understanding the Push to Restore the Full Gambling Loss Deduction: A Guide to the FAIR BET Act and What It Means for Taxpayers

Overview: The Fight for Fair Taxation of Gamblers

U.S. Representative Dina Titus (D-NV) continues to lead a high‑stakes battle in Washington, D.C., to restore the federal gambling loss deduction to 100%. Her FAIR BET Act (Fair Accounting for Income Realized from Betting Earnings Taxation) aims to reverse a recent tax change that reduced the allowable deduction from 100% to 90%. This guide unpacks the history, the current law, the legislative efforts, and what these changes mean for casual bettors, high‑stakes players, and the gambling economy.

Background: How the Gambling Loss Deduction Worked for Decades

For decades, the Internal Revenue Service (IRS) allowed gamblers to deduct 100% of their gambling losses against their winnings for federal tax purposes. This provision was rooted in the principle that taxpayers should only be taxed on their net gambling income—the actual money they walk away with after accounting for losses.

Key Rules Under the Old System

This framework was widely considered a standard tax principle: you pay tax on what you earn, not on your total wagers.

The Change: How the “One Big Beautiful Bill” Reduced the Deduction to 90%

On July 4, 2025, President Donald J. Trump signed the One Big Beautiful Bill (OBBBA) —a sprawling Republican tax package. Buried within it was a provision that reduced the gambling loss deduction from 100% to 90%. The bill’s architects argued that many high‑stakes gamblers were abusing the full deduction to avoid paying any federal income tax on their gambling activities, effectively using losses to offset all winnings.

The “Phantom Income” Problem

The reduction creates a situation where a gambler who wins $100,000 and loses $100,000 in a single year must still report $100,000 in gambling income. With only 90% of losses deductible, the taxpayer can deduct $90,000, leaving $10,000 in taxable “phantom income” that was never actually earned. This outcome has drawn fierce criticism from both industry groups and lawmakers.

Example of the Impact

ScenarioPrevious Law (100% deduction)Current Law (90% deduction)
Total winnings$100,000$100,000
Total losses$100,000$100,000
Net income$0$0
Deductible losses$100,000$90,000
Taxable income$0$10,000
Federal tax (assume 24% bracket)$0$2,400

For a “professional” gambler or a high‑stakes recreational player, the extra tax can amount to thousands of dollars per year, even when they broke even or lost money overall.

Legislative Efforts to Restore the Full Deduction

Representative Titus introduced the FAIR BET Act shortly before the OBBBA was signed, but the bill never reached a floor vote. After the deduction was cut, she has intensified her campaign.

The FAIR BET Act (House)

The FULL HOUSE Act (Senate)

The WAGER Act (An Alternative House Bill)

Rep. Andy Barr (R-KY) introduced the WAGER (Winnings and Gains Expense Restoration) Act in July 2025. It also seeks to restore the deduction to 100%. Ways and Means Committee Chair Jason Smith (R-MO) has publicly supported the idea but has not placed the WAGER Act on the committee’s calendar—more than a year after its introduction.

Why Have Republicans Blocked the Restoration?

The decision to cut the deduction to 90%—and the subsequent reluctance to restore it—stems from several concerns:

1. Tax Evasion by High‑Stakes Gamblers

The Senate Finance Committee, during the OBBBA negotiations, argued that a 100% deduction allowed wealthy gamblers to hide income behind a wall of losses. By reducing the deduction to 90%, they believed the government could ensure a minimum tax payment from this group.

2. Budgetary Impact

Restoring the deduction would reduce federal revenue. The Congressional Budget Office estimated that a full restoration could cost billions over ten years, depending on the growth of legal sports betting and online gambling.

3. Legislative Priorities

The Ways and Means Committee has a crowded agenda, including defense spending, appropriations, and bills related to digital assets (cryptocurrency). Gambling tax relief, while popular in gambling states like Nevada, has taken a back seat to broader fiscal and economic issues.

4. Procedural Hurdles

The Senate’s procedural objection—that tax bills must start in the House—means that even if the FULL HOUSE Act had majority support, it could not advance in its current form. This forces all restoration efforts to go through the House Ways and Means Committee.

Bipartisan Support: A Unifying Issue

Despite the partisan gridlock on many tax issues, restoring the 100% deduction has attracted unusual bipartisan backing.

The core argument is one of tax fairness: gamblers should not be taxed on money they never actually kept. This principle aligns with how other forms of income and loss are treated (e.g., capital gains, business expenses).

Current Status: Stalled, but Not Forgotten

As of late 2025 and early 2026, the FAIR BET Act has not moved beyond the committee stage. However, Representative Titus has publicly urged the Ways and Means Committee to include a restoration provision in any upcoming tax package. Her December 2025 statement on social media read:

“As Ways and Means considers an onslaught of new tax bills this week, I urge my colleagues to include a fix to restore the 100% tax deduction for gambling losses. We just need to get this done. I will not stop fighting until we finally see this over the finish line.”

The committee is currently weighing bills on digital currencies and crypto‑asset trading, which may present a vehicle for attaching a gambling deduction amendment.

What This Means for Gamblers and the Industry

For Recreational Gamblers

The 90% deduction is most painful for those who wager large amounts but break even or lose money overall. A casual casino visitor who wins $5,000 and loses $5,000 would now owe tax on $500 of phantom income. This adds an unexpected tax burden to what was effectively a net-zero gambling year.

For Professional Gamblers

Those who treat gambling as a primary source of income are hit even harder. Professional bettors often have large swings; being forced to pay tax on phantom income can erode their bankroll and make profitability harder to sustain.

For the Gambling Industry

Casinos, sportsbooks, and online operators worry that the reduced deduction discourages customers from placing large bets, especially among high rollers. Nevada’s economy, in particular, relies on a steady flow of gamblers who may now think twice about their tax exposure. Representative Titus has framed the issue as essential to “our unique service economy.”

For Tax Preparation and Compliance

The change adds complexity. Gamblers must now track not only their wins and losses but also ensure they do not accidentally claim more than 90% of losses. The IRS has not yet issued updated guidance for the new rule, leaving some taxpayers uncertain about how to report.

What’s Next: Possible Paths Forward

  1. Amendment to a Must‑Pass Bill – The gambling deduction restoration could be attached to a larger tax extenders package or an appropriations bill. This is a common strategy for stalled legislation.

  2. Pressure from Bipartisan Co‑sponsors – With 11 Republican co‑sponsors in the House and Sen. Cruz in the Senate, there is enough cross‑party support to force a vote if committee leadership relents.

  3. Public Advocacy – Representative Titus continues to use social media and public statements to keep the issue in the spotlight. Constituents in gambling states are encouraged to contact their representatives.

  4. Alternative Legislation – If the FAIR BET Act remains stuck, the WAGER Act or a new compromise may emerge. Chair Smith’s stated support suggests he is open to a restoration—but he has not yet acted.

Conclusion: The Fight Continues

The debate over the gambling loss deduction is a microcosm of larger tax policy tensions: fairness vs. revenue, simplicity vs. anti‑abuse measures. For now, gamblers must live with a 90% deduction and the phantom tax burden it creates. But with strong bipartisan support and a vocal champion in Rep. Dina Titus, the push to restore 100% is far from over.

As Titus said, “I will not stop fighting until we finally see this over the finish line.”