Odds Shorten for Gambling Deduction Restoration With House Appropriations Chair Sponsorship
This week, a well-known House Republican endorsed the FAIR Bet Act, increasing the likelihood that the federal gambling deduction for itemized tax returns will be returned to 100%.
The Fair Accounting for Income Realized from Betting Earnings Taxation Act (FAIR Bet Act), spearheaded by US Representative Dina Titus (D-NV), would correct a tax consequence of the Republicans' One Big Beautiful Bill (OBBB), which lowered the gambling deduction to 90%. A gambler who wins $100,000 but also loses $100,000 would still have to pay federal taxes on $10,000 in phantom income as a result of the provision, which goes into effect for the 2026 tax year.
With 23 cosponsors, Titus' FAIR Bet Act enjoys broad, bipartisan support. There are ten Republicans and thirteen Democrats. But possibly the most significant is the newest member of the GOP House.
FAIR Bet Assistance
US Representative Tom Cole (R-OK) endorsed the FAIR Bet Act on Thursday. Cole is the chair of the House Appropriations Committee and has been a member of Congress for more than 20 years. Appropriations, one of the most influential House committees, is in charge of examining policies that affect government financing.
"Exciting news for the FAIR Bet Act and the gaming community. The chairman of the House Appropriations Committee has just co-sponsored my legislation to rightfully restore the tax code for gamers. Nobody should have to pay taxes on phantom income. Let’s get this done,” Titus wrote on X.
The FAIR Bet Act is a straightforward one-page legislation. The One Big Beautiful Bill would replace "90 percent" with "100 percent" in Section 165(d) of the Internal Revenue Code.
The FULL House Act, also known as the Facilitating Useful Loss Limitations to Help Our Unique Service Economy Act, is companion legislation that US Senator Catherine Cortez Masto (D), Titus' congressional colleague from Nevada, has presented in the Senate.
The History of Gambling Deduction
Similar to how a business can deduct its expenses against its income, gamblers have been able to deduct their losses against their wins on itemized federal tax returns for decades. The 90% gambling deduction provision was added during the Senate Finance Committee's review of the OBBB.
Sen. Mike Crapo (R-Idaho) is the chair of the Senate Finance Committee. The 90% cap, according to its supporters, guarantees that high-volume gamblers must disclose a minimum taxable gain.
The House Ways and Means Committee is still in charge of the FAIR Bet Act. Although he has not yet set a time for the measure to be heard, Chairman Jason Smith (R-MO) has indicated that he is willing to discuss it.
“While the change may appear minor, it will have significant and harmful consequences,” said Titus. “It unfairly burdens professional gamblers and casual players alike and will inevitably drive players toward offshore and unregulated markets where consumer protections are nonexistent, thereby undermining responsible gaming efforts nationwide.”
