New legislation would reverse tax change for gambling losses

As promised, U.S. Rep. Dina Titus has introduced legislation to reverse a measure in the recently passed federal budget bill that would limit the loss deductions for gamblers to 90% rather than 100% currently.

The Nevada Democrat said Monday in a post on X that she introduced the FAIR BET Act with Rep. Ro Khanna, a Democrat who represents California's Silicon Valley. She also said Rep. Troy Nehls, a Texas Republican, signed on, providing bipartisan support.

“My Fair Bet Act would rightfully restore the full deduction for losses so gamblers don’t pay taxes on money they haven’t won," a post on Titus's website reads.

“This common-sense legislation will bring fairness back to gaming taxation, making sure that gamblers can fully deduct losses when they report their winnings. It gives everyone – from recreational gamblers to high-stakes gamblers – a fair shake. We should be encouraging players to properly report their winnings and wager using legal operators. The Senate change will only push people to not report their winnings and to use unregulated platforms.” 

The change was part of President Donald Trump's budget bill, and it received little notice until it was passed. If the change remains in effect, someone with $100,000 in gambling winnings for a year and losses of $100,000 would have to pay taxes on $10,000 rather than zero under the current tax code.

According to Paulick Report, the amendment was introduced late in the process by Sen. Mike Crapo, chairman of the Senate Finance Committee. The Idaho Republican long has been a critic of gamblilng, according to the report.

"This is just another attack on gaming and tourism and on districts like mine that rely on these industries," Titus said in an X post last week. "This also punishes people who are trying to do the right thing by reporting gambling on their taxes, pushing them towards offshore outlets and the predictions market, which unlike legitimate gambling sources, do not invest in bricks and mortar, pay state taxes, hire union labor, or contribute to problem gaming efforts."

National Thoroughbred Racing Association president Tom Rooney commended Titus in a news release.

"There is no Thoroughbred racing without horseplayers," he said. "The changes to the tax deduction are detrimental to them and must be fixed. We’re glad that swift bipartisan action is being taken. Along with Congresswoman Titus, the NTRA will continue to work alongside the Trump administration and leaders in the House and Senate to restore the tax deduction.”