US punters a step closer to restoration of full deduction for gambling losses

The US House Ways and Means Committee has approved legislation that would restore the full deduction of gambling losses against winnings, advancing a change sought by the racing and gaming industries.

The provision from the FULL HOUSE Act passed by 38 votes to five on Wednesday and will now proceed to the full House of Representatives.

The One Big Beautiful Bill Act, enacted in July 2025, limited the deductible amount to 90 per cent of gambling losses for tax years beginning after 31 December 2025. Previously, taxpayers could deduct losses up to 100 per cent of their winnings, although losses could not be used to offset other income.

Under the current provision, a bettor recording US$10,000 in winnings and US$10,000 in losses can deduct only US$9,000. That leaves US$1,000 subject to tax despite the bettor having no net profit.

National Thoroughbred Racing Association president Tom Rooney attended the committee vote and said racing had worked with other groups to reverse the restriction.

“It’s a good first step,” Rooney said. “It’s got to go to the House floor now, then to the Senate, and then to the President’s desk.”

The bill is sponsored by Nevada Democrat Steven Horsford, who argued that the 90 per cent limit created a tax liability on income that bettors had not retained.

“No one should pay taxes on money they never earned,” Horsford said.

The American Gaming Association also backed the committee decision, arguing that restoring the deduction would help keep consumers within regulated wagering markets by removing tax on what it called “phantom income”.

The measure must pass the House and Senate before reaching the President. Rooney said the NTRA would continue advocating for its enactment.