Starting January 1, 2026, the One Big Beautiful Bill cut the allowable deduction for gambling losses from 100% to 90%, creating “phantom income” for bettors who break even or lose overall. Under the new rule, a gambler who wins and loses the same amount—for instance, $15,000—could only deduct $13,500 of losses and would owe tax on the remaining $1,500.
The change drew swift criticism from both gambling stakeholders and tax professionals. High-volume bettors—particularly those involved in casino gaming, horse racing, poker, and sports wagering—are expected to feel the most acute impact of the deduction cap.
On January 13, 2026, Representatives Steven Horsford (D-NV) and Max Miller (R-OH) introduced House Resolution 6985, the FULL House Act, which would fully restore the deduction to 100% for itemized filers. The bill is a companion to similar legislation in the Senate, co-sponsored by Senators Catherine Cortez Masto (D-NV) and Ted Cruz (R-TX).
Horsford and Miller’s effort complements Representative Dina Titus’s FAIR Bet Act (HR 4304), which already has 23 co-sponsors (13 Democrats, 10 Republicans). Despite widespread backing, none of the bills—including FULL House and FAIR Bet—have advanced to Ways and Means Committee votes.
Proponents contend that taxing bettors on non-existent gains—due to the deduction cap—is fundamentally unfair. Horsford emphasized that the limitation undermines the traditional tax treatment of wagering transactions. Moreover, gambling represents a vital sector in Nevada’s economy; its representatives argue that reducing tax incentives may suppress legal gambling activity and revenue.
Opponents of full restoration argue that the cap ensures that high-volume gamblers contribute at least some tax, even when they offset losses. This approach delivers a modest increase in federal revenue—estimated at approximately $1 billion over ten years.
With the cap taking effect in 2026 and no legislative fix yet passed, bettors may face surprise tax liabilities this filing season. Geared toward fairness and clarity, both the FULL House Act and FAIR Bet Act would reverse the cut and retroactively restore full deductibility when passed and signed.
Supporters are urging House Ways and Means Chair Jason Smith (R-MO) to prioritize these bills in upcoming committee discussions. As of mid-January, there are no confirmed hearings or votes scheduled.
