Controversial Gambling Tax Provision Passes in House Without Amendments, Set to Take Effect in 2026

In a move that’s already stirring backlash across the gambling community, the U.S. House of Representatives has officially passed the Senate’s version of the “Big Beautiful Bill Act” without any amendments—ensuring the inclusion of a controversial provision that alters how gambling losses are treated under federal tax law. The bill now heads to President Trump’s desk for signature and, once signed, the new policy will go into effect beginning in 2026.

A seemingly minor change tucked within the broader legislation shifts the allowable tax deduction for gambling losses from the current 100% of winnings down to 90%. While the difference may appear small on paper, its real-world consequences for gamblers—especially professionals—could be dramatic.

Currently, gamblers are permitted to deduct losses up to the total amount of their winnings. For instance, if a person wins $100,000 and loses the same amount, their net gambling income is zero, and thus they owe no tax. The same logic applies to professional gamblers, who can also write off travel, lodging, and other related expenses—so long as those expenses and losses don’t exceed winnings.

However, under the amended law set to take effect in 2026, only 90% of losses can be deducted against winnings. That means in the same scenario—$100,000 in winnings and $100,000 in losses—the gambler will now be permitted to deduct only $90,000 in losses. The result is $10,000 in taxable income, despite having made no profit.

Given the standard gambling income tax rate of around 24%, that hypothetical gambler would owe $2,400 in taxes on what amounts to zero earnings.

Nevada Congresswoman Dina Titus has been quick to respond. The day after the Senate passed the bill, Rep. Titus declared she is “working on a legislative fix that fairly treats gaming losses in the tax code.” Speaking to Las Vegas’ Channel 13, Titus revealed she had hoped to introduce an amendment but said House managers rejected the idea. She added, “I plan to bring a bill to repeal the provision next week.”

As a Democrat operating in a Republican-controlled House, Titus faces significant challenges in reversing the measure. She has also questioned the Joint Tax Committee’s projection of $1.1 billion in federal revenue over the next eight years from the provision, saying the figure is exaggerated. According to Titus, Republicans are “looking for every dime they can find” to compensate for tax cuts embedded in the larger legislation.

Furthermore, Titus emphasized that the new rule penalizes honest gamblers. “This punishes the people who do the right thing and report their winnings,” she said, warning that the change will likely push more people toward offshore gambling or lead them to underreport their earnings in order to avoid heightened taxes.

Criticism from within the gambling industry has been swift and sharp. Professional poker player Phil Galfond stated that the deduction cap “would end professional gambling.” Although he later acknowledged that may be an overstatement, he stressed that the change would make many professional careers “no longer viable,” and warned that both professional and casual gamblers might turn to offshore platforms to escape the tax burden.

Captain Jack Andrews, a prominent professional sports bettor and educator in the field, didn’t mince words, describing the measure as “an existential threat” to professional gambling in the United States.

Russell Fox, a tax expert and poker player, echoed these concerns and expressed frustration over the lack of awareness. “Many in the industry were unaware of the provision,” Fox noted, adding that he and others are now mobilizing to push for its reversal.

Recreational gamblers are also at risk. Casual bettors could find themselves blindsided by unexpected tax bills even when they break even, discouraging participation and potentially diminishing legal gambling activity. The fear is that some may opt to gamble through offshore platforms that lack IRS reporting requirements and offer anonymity.

The consequences could extend beyond individual gamblers. Casinos and legal online platforms may suffer from decreased wagering activity, especially from high-stakes or frequent bettors who help drive liquidity and market volume. With fewer bets being placed domestically, state governments stand to lose tax revenue as players either reduce their activity or shift to unregulated options abroad.

As President Trump prepares to sign the bill, industry stakeholders, lawmakers, and tax professionals are now bracing for the impact of a change that could reshape the economics of gambling in the United States.

By fLEXI tEAM