Legislation that would restore the 100% tax deduction on gambling losses has bipartisan support, key members of Congress said at a hearing Friday.
- An online survey conducted by Covers suggests the 50-cent fee that DraftKings and FanDuel are planning to charge in Illinois could curb wagering by some customers.
- The fee is being imposed by the two online sportsbook operators in response to a new per-bet tax passed by Illinois lawmakers.
- While the new per-bet fees and tax could tamp down wagering, it's also possible the two bookmakers come out ahead financially no matter what.
Republican Rep. Jason Smith of Missouri said at a “field hearing” in Las Vegas that members of both parties were discussing a Democratic proposal to restore the 100% deduction Congress removed in the One Big Beautiful Bill (OBBB) passed earlier this month. Smith, the House Ways and Means Committee chair, which has oversight of the loss deduction bill, said members of Congress and the public were interested in the change.
“For those of you concerned about this change, I can tell you that members on both sides of the aisle have heard you,” Smith said Friday. “And I know that many members on both sides of the aisle are open to working to address it before it goes into effect on Jan. 1.”
Smith’s remarks were the strongest public show of support yet from a Republican backing the legislation. His comments came hours after Republican Rep. Andy Barr of Kentucky filed a second bill that would restore the deduction, further highlighting growing political support for the proposal.
Gambling loss impacts
The OBBB reduced the 100% gambling loss deduction to 90%, causing alarm among professional gamblers and the gaming industry overall. As currently written, the bill would dramatically increase some gamblers’ tax burden, leading to concerns it would force would-be legal gamblers to illegal, untaxed options.
Under the current tax law, a taxpayer who itemizes their earnings from gambling can reduce 100% of their losses against their wins. A hypothetical gambler who won $100,000 and lost $100,000 gambling in the same calendar year wouldn't have to pay any taxes on those winnings.
Under the changed law, that same gambler could only deduct 90% of the losses against the wins, meaning they'd have to pay taxes on $10,000 even though they earned no net profit from their gambling winnings.
🎥 Video of Rep. Jason Smith (R-MO), the Chairman of the House Ways and Means Committee, directly addressing the gambling loss deduction issue. A promising sign for a fix getting done despite the FAIR BET Act having not yet been scheduled to get a committee hearing https://t.co/5SMTE7ms6N
— DataBasedBets (@DataBasedBets) July 25, 2025
Democratic Rep. Steven Horsford of Nevada said at Friday’s hearing the bill “unilaterally thrusted the gaming economy and its patrons into uncertainty” with the “unjust” inclusion of the wagering loss penalty. He pressed Smith to guarantee he'd work with Democrats to restore the 100% deduction.
Smith responded by saying the tax loss change wasn't part of the original OBBB version the House passed and that the issue came from changes in the final bill the Senate passed.
“I’ve been crystal clear that we’ll look at what avenues we can to address the problem the Senate created,” Smith said.
Correction campaign
Though the change would only directly impact the small subset of taxpayers that itemize gambling earnings, the gambling tax loss provision's late addition nevertheless led to fears of a larger impact on the gambling industry and national media coverage.
Nevada Rep. Dina Titus led high-profile efforts to restore the 100% loss, filing the initial restoration bill shortly after the OBBB was signed into law July 4 and campaigning for it daily in the following weeks. She said Friday she's received more than a million responses to her social media posts addressing the gambling tax loss.
“I have never gone viral before, but this issue has actually done that,” Titus said during Friday’s hearing. “This shows this is not just a Nevada issue.”
The repeal legislation gained six Democratic and four Republican co-sponsors, including the entire four-person Nevada House delegation and New Jersey Rep. Jeff Van Drew, whose district includes Atlantic City.
No one should have to pay taxes on phantom income.
— Dina Titus (@repdinatitus) July 25, 2025
Democratic Nevada Sen. Catherine Cortez Masto tried to pass companion legislation through the Senate by unanimous consent earlier this month but Republican Indiana Sen. Todd Young objected to it. The bill must pass both House and Senate before it can become law.
Young’s objection underscores the political difficulties passing a Democratic-led change to a bill Republicans approved just a few weeks earlier. The House is also in a recess scheduled to continue until September, leaving little time to pass the legislation before its Jan. 1 effective date.
The bill doesn't have a vote scheduled in the Ways and Means committee.
Still, the Republican-sponsored bill introduced Friday followed by Smith’s comments underscores the bipartisan backing for the legislation. More importantly, it shows Republican support, which is essential for the measure’s passage.
