Gambling Loss Tax Fix Advances in Congress Today

⏱ 3 min read

The federal fix for the gambling loss "phantom tax" took its biggest legislative step yet on September 16, 2026, when the House Ways and Means Committee convened a markup of H.R. 10357, the Digital Asset Tax Certainty Act — a 98-page package that quietly includes, on page 95, a provision eliminating the 90% cap on gambling loss deductions introduced by the One Big Beautiful Bill (PL 119-21), signed by President Trump on July 4, 2025.

The inclusion was championed by Rep. Dina Titus (D-NV), who said she was "very pleased" to see the fix added and called on her Ways and Means colleagues to pass it without delay. If enacted, the provision would restore dollar-for-dollar deductibility of gambling losses against winnings — retroactively for all taxable years beginning after December 31, 2025, meaning US bettors who already filed 2025 returns under the 90% rule could amend them to claim full refunds.

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The Phantom Tax Explained

For decades, US tax law allowed gamblers to deduct 100% of their wagering losses against their gambling winnings on their federal return. The One Big Beautiful Bill, signed into law on July 4, 2025, introduced a 10% floor on non-deductible losses — meaning a bettor who wins $100,000 and loses $100,000 in the same tax year now owes federal income tax on $10,000 of phantom income that never appeared in their bank account.

The Tax Foundation identified the measure as creating "unequal tax treatment" for gambling losses compared with other investment-style activities, and Reason.org noted it taxes bettors "on money they didn't keep." The effective tax hit scales with betting volume: high-turnover recreational bettors and professional gamblers face the steepest exposure, while the threshold creates a meaningful disincentive to report winnings accurately — a compliance risk for state and federal regulators nationwide.

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The FULL HOUSE Act Fix

The FULL HOUSE Act (Facilitating Useful Loss Limitations to Help Our Unique Service Economy) was introduced on January 8, 2026 by Rep. Max Miller (R-OH) and co-sponsor Rep. Steven Horsford (D-NV), with a Senate companion led by Sen. Ted Cruz (R-TX) and Sen. Catherine Cortez Masto (D-NV). Its bipartisan structure is notable: the measure draws support from both parties and from Americans for Tax Reform, which endorsed it on free-market grounds.

The September 16 markup is the first time the provision has advanced inside an active committee vehicle. An earlier attempt via the FAIR BET Act was blocked by the House Rules Committee in January 2026. As written inside H.R. 10357, the language "eliminates the 90% limitation on the deduction for losses from wagering transactions" and applies retroactively to all taxable years beginning after December 31, 2025.

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What This Means for US Bettors

The stakes for the US sports betting and casino industries are substantial. The gaming sector directly employs around 700,000 people and supports 1.8 million jobs nationally; in Nevada alone, gaming taxes fund roughly 35% of the state budget. Operators and industry groups have argued that the phantom tax — by raising the true cost of regulated betting — pushes high-volume bettors toward offshore books that report nothing to the IRS.

• Professional gamblers face the largest liability: a player with $500,000 in gross wins and $500,000 in losses currently owes tax on $50,000 of phantom income.
• Poker professionals are disproportionately exposed, since tournament cashes are reportable wins while re-entry fees are losses — creating lopsided federal obligations.
• If passed retroactively covering tax year 2025, US bettors could amend filed returns to reclaim phantom-income tax already paid.
• Industry groups including the American Gaming Association have actively lobbied for restoration since the OBBBA's enactment.

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Before vs. After: Tax Scenarios

Bettor Type	Gross Winnings	Gross Losses	Taxable Under 90% Rule	Taxable If Restored
Break-even recreational bettor	$10,000	$10,000	$1,000 phantom income	$0
Moderate sports bettor	$50,000	$50,000	$5,000 phantom income	$0
High-volume poker player	$200,000	$200,000	$20,000 phantom income	$0
Net winner (ahead on the year)	$100,000	$60,000	$46,000 net taxable	$40,000 net taxable

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What Comes Next

A committee markup is not a floor vote. H.R. 10357 must still clear the full House of Representatives, pass the Senate, and be signed into law — each step carrying political uncertainty. The Senate companion has support from Cruz and Cortez Masto but has not been scheduled for Finance Committee consideration.

The industry's best-case scenario is that H.R. 10357 advances quickly as part of a broader tax package before the end of the 119th Congress. If it stalls, the gambling deduction would need to be re-attached to another legislative vehicle — and the retroactive element covering tax year 2025 becomes harder to justify with each passing month.

• Next step: Full House floor vote on H.R. 10357 — no date yet confirmed.
• Senate: Cruz/Cortez Masto companion bill awaiting Finance Committee scheduling.
• If enacted, IRS guidance on amended 2025 returns would follow passage.
• Failure to pass before January 2027 would likely require the retroactive element to be renegotiated.

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Sources

Primary legislative records, official congressional statements, and major industry publications cited in this report.

Very pleased to see that my gambling loss tax deduction fix has finally been included in a tax package. I encourage my colleagues to push it through Ways and Means this week as quickly as possible.

— Rep. Dina Titus (D-NV), US House of Representatives · Statement on H.R. 10357 inclusion, September 2026