What changed in the tax rules and why it became a problem
After last year’s tax changes adopted under the One Bill Beautiful Bill Act, when filing their annual returns players will be able to deduct not 100% of their losses, but only up to 90%. At first glance the difference seems small, but the industry says the impact is significant.
Industry representatives call it the “phantom income” trap. The essence of the problem is simple: a person who over the year lost and won the same amount effectively broke even, but under the new order could still end up with taxable income. Money the player never actually earned turns into “phantom” profit on which tax must be paid.
A further complication arises with winnings obtained through the use of casino bonuses. This includes both bonus funds and free spins. Even if the no deposit free spins, the winnings are still taxed based on the amount won. Such a system looks illogical—and its opponents point to Canada’s experience.
In Canada, casual players generally aren’t taxed at all—and it doesn’t matter whether a player used their own deposit for bets or no deposit free spins. The exception is professional gamblers, meaning people who gamble on a systematic basis and earn money from it.
How events unfolded on Capitol Hill
The week’s developments can be summed up in a few key episodes:
The procedural outcome and what the committee’s refusal means
Without approval from the House Rules Committee, the amendment cannot be brought up for a vote as part of the current “must-pass” bill. This means the initiative is put on ice until a new suitable legislative vehicle emerges. The issue is unlikely to return unless the provision is included in another must-pass document later this year or brought forward as a standalone bill.
Dina Titus’s position and supporters’ arguments
Titus tried to fold the provision restoring the deduction into the spending bill, but failed. In a Friday statement, she expressed disappointment that “the House Rules Committee chose not to move forward with legislation to restore the full 100% deduction for gambling losses.” The congresswoman emphasized that “I don’t care how this injustice is fixed—what matters is that it gets fixed. This is a tax on phantom winnings, and it affects everyone who places bets.” The Nevada delegation will continue pressing the case through future appropriations packages or standalone legislative initiatives.
Who will be hit hardest by the 90% cap
According to industry representatives and tax specialists, the cap will hit professional gamblers and high-stakes players first and foremost. Poker players will be among the first affected. High-limit slot players will face a similar problem. Sports bettors will also fall under the new restriction.
The FAIR BET Act as a separate legislative path
Titus is pushing the bipartisan FAIR BET Act, introduced back in July of last year and restoring full deductibility. Last week’s events were an attempt to pass a similar provision not as a standalone bill, but via an amendment to an appropriations package, which would have sped up the process.
Parallel work in the Senate on the FULL HOUSE Act
Parallel work is underway in the upper chamber. Senators Catherine Cortez Masto and Jacky Rosen, both Democrats from Nevada, along with Texas Republican Ted Cruz, are co-sponsoring the FULL HOUSE Act. The bill’s goal is the same: restoring the 100% deduction for gambling losses.
Casino lobbying and the search for a new legislative window
Back in December, executives from the largest Las Vegas casino operators and the gaming industry’s main lobbying group met with Jason Smith, a Missouri Republican and chair of the House Ways and Means Committee. The meeting was part of a strategy: building support among key figures ahead of the next attempts to add the provision to a suitable bill.
Supporters are looking for another bill to amend
The next plan of action boils down to searching for new legislative opportunities over the course of the year. This could be another appropriations package or a separate vote on relevant initiatives. Titus put it succinctly: “There will be other opportunities to get this provision into a bill for consideration on the House floor. I’ll use every one of them until we get results.”