Effort to Repeal Controversial Gambling Tax Rule Fails as Amendment is Blocked from Defense Bill

The Target: a 90% Loss Deduction Cap

The legislative battle centers on a provision in the recently passed “One Big Beautiful Bill Act” (OBBBA) that, starting in the 2026 tax year, will cap the amount of gambling losses that can be deducted from winnings at 90%. This is a major departure from the 100% deduction that has been in place for decades.

Critics, led by Nevada Representative Dina Titus, the author of the FAIR BET Act, argue that this change will create a situation where a player who breaks even for the year could still face a significant tax liability on 10% of their losses. The gaming industry has fiercely opposed the measure, warning it could make professional gambling unprofitable and push casual players to unregulated offshore sites.

A “Must-Pass” Strategy Hits a Wall

Rep. Titus’s strategy was to attach her one-line bill, which would simply restore the 100% deduction, to the NDAA. This is a common legislative tactic, as the annual defense spending bill is considered “must-pass” and often becomes a vehicle for unrelated amendments.

However, the House Rules Committee declined to allow the amendment to proceed, a decision Titus called a missed opportunity for an “easy to adopt amendment that should have passed.”

A Bipartisan Effort Continues

Despite this setback, the fight to repeal the 90% cap is far from over. The FAIR BET Act remains active as a standalone bill in the House Ways and Means Committee, and Rep. Titus has vowed to continue building support for it.

The effort has significant bipartisan backing, with several Republican co-sponsors on board. The chairman of the Ways and Means Committee, Representative Jason Smith, has also signaled a willingness to address the issue and has expressed his agreement that the full 100% deduction should be restored.

The FAIR BET Act is one of three active bills in Congress aimed at reversing the new tax rule. In the Senate, the “FULL HOUSE Act,” introduced by Senator Catherine Cortez Masto of Nevada, has also been introduced, as has the “WAGER Act” from Kentucky Representative Andy Barr in the House.

The failure of the NDAA amendment means the path to a legislative fix is now more difficult and uncertain. The standalone bills will have to navigate the full, and often arduous, committee and floor process in both the House and the Senate.

The clock is ticking. The new 90% loss deduction cap is set to go into effect for the 2026 tax year, and with Congress heading into a contentious election season, the window for legislative action is narrowing. The gaming industry and its allies now face a more challenging and protracted fight to undo a tax change they see as a fundamental threat to the legal, regulated market.