Bipartisan lawmakers and gaming leaders push to reverse the Big Beautiful Bill’s gambling loss cap

The casino and sports betting sector has its eyes on a controversial provision of the OBBB Act signed into law by Congress last week. Notably, the tax and spending bill limits the gambling loss deduction to 90% of losses beginning in 2026.

“This could create phantom income for some high-volume gamblers that even breakeven or lose money in a given year, such as poker players and sports bettors. Although this customer cohort isn’t particularly profitable for the industry given the relatively low win margins, recreational players could also see higher tax liabilities and reduced betting volumes,” highlighted CBRE Equity Research analyst John DeCree.

A legislative fix called The Fair Bet Act has already been filed in Congress. The bill was introduced by Representative Dina Titus of Nevada, with bipartisan support, to address the recent changes in U.S. gambling tax law. The legislation is co-sponsored by Reps. Troy Nehls (R-TX), Ro Khanna (D-CA), Jeff Van Drew (R-NJ), Steven Horsford (D-NV), and Mark Amodei (R-NV).

The bill seeks to restore the full 100% deduction for gambling losses. The Act amends Section 165(d) of the Internal Revenue Code to strike the “90 percent” cap and reinstate “100 percent” deductibility. Gaming industry leaders and lawmakers have warned that the 90% cap could drive players to unregulated offshore gambling sites, harming both the legal gambling industry and tax compliance.

The American Gaming Association and The National Thoroughbred Racing Association have both issued statements supporting the Fair Bet Act. It is still unclear if the bill will advance to be debated and voted on.

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