Nevada Representative Dina Titus hit a wall Tuesday when House Republicans blocked her FAIR BET Act, leaving millions of gamblers stuck with a tax change that makes them pay the IRS even when they lose money. The GOP-controlled Rules Committee rejected her attempt to add the fix to the National Defense Authorization Act, keeping in place a provision that cuts gambling loss deductions from 100% to 90% starting January 1, 2026.
But what this means in real money is: If you win $100,000 at the tables but lose $100,000 on sports bets in the same year, you can only deduct $90,000 of those losses. You’ll owe taxes on $10,000 you never actually had – and the government expects to collect $1.1 billion from this change over the next eight years.
The rejection comes at an odd time – Americans legally bet almost $150 billion on sports in 2024 alone. The commercial gaming industry pulled in $72 billion last year, and paid states and local governments a record $15.91 billion in direct gaming taxes. Online gambling exploded from $2.5 billion in 2018 to $20 billion in 2023. Nearly half of all Americans (49%) visited a casino in 2024, the highest percentage ever recorded.
At the same time, the turn toward online field has completely changed how people gamble. About 95% of sports bets now happen online through phones and apps. Seven states run full online casinos, with iGaming revenue jumping 28.7% year-over-year to hit $8.41 billion. The convenience factor has drawn in younger players as well – and the average casino visitor dropped from almost 50 years old in 2019 to 42 today. For many players exploring these platforms, online gambling presents a very individual choice with personalized game recommendations, custom bonuses, and AI systems that learn their preferences. Some sites now have virtual reality blackjack, NFT-based rewards, and crypto payments that regular casinos can’t match.
But what makes this tax defeat especially frustrating is that nobody seems to actually want it. Kentucky Republican Andy Barr filed his own bill, the WAGER Act, to fix the problem. Senator Catherine Cortez Masto introduced the FULL HOUSE Act, doing the same thing. Jason Smith, the Republican who chairs the House Ways and Means Committee, called the tax change “a bad decision” at a July hearing.
Even the senators who voted for it claim they didn’t know what they were doing. Republicans Chuck Grassley and John Cornyn both sit on the Senate Finance Committee that added the gambling provision to Trump’s One Big Beautiful Bill. After the bill passed, both told reporters they had no idea the change was in there.
The American Gaming Association backs the effort to restore the full deduction, though it initially supported the broader tax package that contained it. They argue the change hits professional and high-volume gamblers hardest, but anyone who itemizes deductions will feel it. A professional poker player explained the real impact: “I might have a winning year overall, but lose money after taxes. That’s insane.”
Titus won’t give up, though – the first pushed this issue in July when she introduced the original FAIR BET Act, which still sits in committee. She tried again in August with the NDAA amendment that just failed. “This was an easy fix that should have been adopted,” she tweeted after the rejection. “Nonetheless, I will continue to build support to restore the 100% gambling loss deduction.”
The best shot for change might come in 2026 when major parts of the 2017 Tax Cuts and Jobs Act expire. Congress will have to revisit the entire tax code then, giving gambling advocates another chance to make their case. They’ll argue that while 38 states plus D.C. have legalized sports betting to boost tax revenue, the federal government is double-dipping by taxing money that doesn’t exist.
Until something changes, gamblers need to track every bet meticulously. The IRS still requires detailed documentation to claim any deduction, and with the new 90% cap, that paperwork becomes even more critical. Some tax professionals worry the change will push casual gamblers toward offshore sites that don’t report to the IRS, undermining both tax collection and the legal market states have worked hard to build.
The gambling industry keeps growing, technology keeps advancing, but the tax code just took a step backwards that nobody asked for.