Gamblers who break even on paper have been getting taxed on money they never actually won since the start of this year, and on Wednesday, a congressional committee finally moved to fix it. The House Ways and Means Committee voted 38-5 to advance a bill restoring the full 100% tax deduction for gambling losses, undoing a provision that has rattled casinos, sportsbooks and horse tracks nationwide since January.
Nevada Rep. Dina Titus, who has championed the fix for more than a year, said her provision to restore the full gambling-loss tax deduction passed out of committee, according to KSNV. The language that cleared committee was folded into H.R. 10357, the Digital Asset Tax Certainty Act, a broader cryptocurrency and digital asset tax bill, according to the House Ways and Means Committee. Titus said the House should approve the measure before January 1, 2027, per the same KSNV report.
The problem dates back to the One Big Beautiful Bill, which reduced the gambling-loss deduction from 100% to 90% in 2025, according to KSNV's reporting. Under the old rules, a person reporting $100,000 in winnings and $100,000 in losses owed no taxes on the matching amount; under the new cap, that same bettor still owes taxes on $10,000 they never actually won, the station reported.
A Provision Nobody Meant to Pass
The 90% cap was enacted under Section 70114 of the One Big Beautiful Bill Act on July 4, 2025, amending Internal Revenue Code Section 165(d) effective for tax years beginning after December 31, 2025, according to KPMG. Following the bill's passage, prominent lawmakers including Sen. Ted Cruz (R-TX) publicly said members of Congress were unaware the cap was in the final text and called for it to be corrected, according to the Journal of Business Law.
Titus has framed her fix, the FAIR BET Act, as a proposal to restore a 100% deduction for gambling losses that would stop the reduction to 90% from taking effect, per KSNV. She has said the bill would ensure gamblers do not pay tax on gambling money they never won, and that she fought for 14 months to move the bipartisan measure through committee. The bill has backing from MGM Resorts, Caesars Entertainment, Wynn Resorts, the Nevada Resort Association and the American Gaming Association, KSNV reported, and Titus and other members of the Nevada congressional delegation have criticized the reduction.
Bipartisan Origins, Long Road to Committee
The specific language incorporated into H.R. 10357 was modeled after the FULL HOUSE Act, a bipartisan bill introduced in January 2026 by Rep. Steven Horsford (D-NV) and Rep. Max Miller (R-OH), according to BloodHorse. Both Horsford and Miller sit on the Ways and Means Committee, giving their bill procedural leverage during the markup process.
Titus's path to Wednesday's vote was not straightforward. She filed Discharge Petition No. 16 in February 2026 in an attempt to force a House floor vote on the FAIR BET Act, after an earlier September 2025 attempt to attach the provision to the National Defense Authorization Act was rejected, according to Hobbs, Straus, Dean & Walker, LLP. Discharge petitions require 218 House member signatures to bypass committee leadership entirely.
Industry Warns of Offshore Flight and a Real Fiscal Cost
During an open IRS hearing in July, Titus and representatives from the American Gaming Association jointly testified against the 90% cap, warning that taxing break-even gamblers creates punitive phantom income, according to CDC Gaming Reports. Industry advocacy groups have separately warned that capping loss deductions at 90% threatens regulated sports betting by pushing high-stakes gamblers toward unregulated offshore sportsbooks, per the Journal of Business Law.
Horse racing has felt the pinch too. In July, the National Thoroughbred Racing Association formally asked U.S. Treasury Secretary Scott Bessent to intervene, citing declining betting handle and player dissatisfaction tied directly to the 90% cap, according to BloodHorse. Legal sports wagers in the United States reached a record $166.94 billion in 2025, an 11% increase over 2024, according to The Health Money, underscoring how large the pool of affected bettors has grown.
Restoring the full deduction is not without cost to federal coffers. Repealing the 90% cap and returning to a 100% gambling loss deduction is projected to reduce federal tax revenue by roughly $2 billion over the ten-year period from 2027 through 2036, according to estimates by the Joint Committee on Taxation cited by Legal Sports Report. That trade-off will now face scrutiny as H.R. 10357 heads toward a full House floor vote and, eventually, the Senate, with lawmakers racing to act before the cap locks in for the 2026 tax year on January 1, 2027.
