Legislation aimed at reinstating the complete gambling loss tax deduction remains stuck in Congress, even as the House resumes normal operations after an extended disruption. Despite bipartisan interest in undoing the upcoming 90% cap on deductible losses, lawmakers have little room left in the calendar to advance the measure, dimming hopes of a near-term fix for high-value gamblers and the gaming sector that depends heavily on their spending.
Congressional Gridlock Threatens Tax Relief Effort
Because the House was sidelined during the lengthy government shutdown, lawmakers were unable to debate or move forward with proposals to reverse the deduction change. The chamber has now returned to regular business, but with holiday recesses approaching and an already packed schedule, supporters acknowledge the odds of passing a corrective bill are shrinking quickly.
During the shutdown, Rep. Morgan McGarvey of Kentucky and Rep. Nick LaLota of New York became the 19th and 20th co-sponsors of the restoration bill. Advocates continue to signal confidence that a reversal is possible before the year concludes. Still, the window is rapidly closing, and failure to act could carry broad consequences across the regulated gambling industry.
Rising Tax Burdens for Big Gamblers
Under the tax rules scheduled to take effect in 2025, gamblers who itemize will no longer be able to deduct their losses dollar-for-dollar. Instead, a 90% cap will apply. The shift marks a major departure from the previous framework, where a player reporting $100,000 in winnings and $100,000 in losses would owe no tax. Under the new provision, which was inserted into the One Big Beautiful Bill shortly before its Senate passage, that same individual would be limited to deducting $90,000 in losses.
Lawmakers from both parties, including several from Nevada, expressed frustration after discovering the late addition of the gambling provision. Many said they had been unaware of the change and would support restoring the full deduction. Yet, neither of the House bills proposing such a fix — one from Rep. Dina Titus and another from Rep. Andy Barr—has made it to the floor for a vote.
Industry Braces for Possible Economic Fallout
Rep. Jason Smith of Missouri, who chairs the committee overseeing both House measures, has publicly backed the restoration effort. But even with his support, the legislation would still need to advance through committee, win approval from the full House, and then secure passage in the Senate—an increasingly tall order with fewer than eight weeks left in the current session. A Senate companion bill remains similarly stalled.
Analysts warn that failing to restore the deduction could generate billions in economic losses for casinos, sportsbooks, and related gaming businesses. While only a limited number of taxpayers itemize gambling losses, these individuals—often high-stakes “whales”—provide essential liquidity that operators rely on to handle wagering volume and fund broader customer activity.
The timing is particularly sensitive as FanDuel and DraftKings prepare to roll out prediction markets, which are taxed differently from traditional sportsbook and casino winnings. Some observers speculate that these new products could draw activity away from existing gambling channels at a moment when tax changes are already poised to reshape bettor behavior.
Source:
“Gambling Loss Tax Deduction Bill Remains in Limbo as House Reconvenes”, finance.yahoo.com. November 18, 2025
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