Efforts fail to reverse controversial new U.S. gambling tax rule
As the dust settles from the passage of President Donald Trump’s “One Big Beautiful Bill Act”, the sports betting world is dealing with a controversial gambling tax rule that managed to pass with little initial attention. Professional gamblers have already raised alarms, and now lawmakers are attempting to undo the measure and bring back what many consider a fairer system. Here’s a look at how the fallout is playing out in Congress and across the gambling industry.
The new tax rule and its ripple effect
At the centre of the dispute is a technical adjustment that carries major consequences: starting in 2026, gamblers will only be allowed to deduct 90 percent of their annual losses from their winnings. For decades, the deduction allowed for the full 100 percent. The revised rule means that even gamblers who break even could end up paying tax on imaginary profits, money they never actually received. The stakes are especially high for professionals and high rollers whose profit margins are tight and volumes significant.
Take this example: someone who wins and loses $100,000 in a single year would still face tax on $10,000 of theoretical income. For players who rely on gambling as their income, these numbers are not just theoretical, they could cause massive financial strain, even in profitable years.
The FAIR BET Act: Congress responds
The industry response was quick and vocal. In an attempt to fix the issue, Congresswoman Dina Titus of Nevada introduced the Fair Accounting for Income Realized from Betting Earnings Taxation (FAIR BET) Act. The bill seeks to reinstate the full 100 percent deduction for gambling losses. Titus, who represents part of Las Vegas, described the rule as “an unfair tax placed on gamblers” and explained that her bill “would rightfully restore the full deduction for losses so gamblers don’t pay taxes on money they haven’t won”.
The proposal has gained traction on both sides of the aisle. Representative Ro Khanna (D-Calif.) is backing the bill as a co-sponsor. Titus has also claimed the provision “was inserted by Senate Republicans without consent of the House”, warning it could damage the credibility of legal gambling in the U.S. “We should be encouraging players to properly report their winnings and wager using legal operators. The Senate change will only push people to not report their winnings and to use unregulated platforms,” .
The bill is now moving through the House legislative channels, with the House Ways and Means Committee up next. Supporters hope the measure will restore a gambling tax framework that has long been seen as reasonable and practical.
Industry reaction and the path forward
The American Gaming Association (AGA), which originally backed the wider “Big Beautiful Bill”, has since thrown its support behind the FAIR BET Act. “We are committed to working with Congresswoman Titus, other congressional leaders, and the Trump Administration to restore the long-standing tax treatment of gaming losses,” the AGA said in a . The association has also raised concerns that the new gambling tax changes could drive more bettors to offshore sites, where protections for consumers and regulatory oversight are limited.
Industry professionals see this not just as an issue for full-time gamblers, but as a larger problem that could weaken the entire regulated betting space. Nathan Goldman, a tax expert at North Carolina State University, has said the rule “is going to devastate the Nevada economy. The professional gamblers bring a lot to that economy”. There is also growing scepticism that the projected $1.1 billion in added tax revenue will materialise, especially if big players scale back or take their action underground.
The FAIR BET Act’s progress is now under close watch, not just by lawmakers but also by operators and everyday bettors. Although the current rules remain unchanged for now, there’s a clear sense from both industry insiders and political figures that the push for fairer gambling taxes is still very much alive.
