Politicians got back to DC this week with many unsettled issues, and a bill about how to tax gambling losses is still at the bottom of the list. The plan, which would bring back full tax write-offs for gambling losses, has support from both parties in the House and Senate. However, it is not moving forward much as time runs out for new laws.

Lawmakers Race to Fix Gambling Tax Rule That Could Penalize Break-Even Bettors

The effort to bring back the full deduction started when a rule hidden in the massive One Big Beautiful Bill this year put a 90% limit in place. From 2025 on, people who itemize will not be able to balance out their wins with their losses. Experts say this might result in frequent bettors paying taxes on money they never earned. Stories going around among politicians show cases where a gambler who does not win or lose overall could still owe taxes on thousands of dollars of income.

Lawmakers Dina Titus from Nevada and Andy Barr from Kentucky brought forward House bills to undo the change, while a similar bill sits idle in the Senate. Committee heads have voiced their backing, but voting has not been set in either part of Congress. The long government closure earlier this fall stopped almost all law-making progress, and those in the know now warn that rival year-end cut-off dates leave little space to fix taxes on their own.

Industry Braces for Billions in Lost Activity if Deduction Limit Stands

People who back bringing back the full deduction say it will have a bigger impact on the financials of casinos and sportsbooks that rely on big spenders. Groups in the industry have told lawmakers that stricter rules might slow down betting from high rollers, cutting into operators’ cash flow and limiting how much they can risk on big bets. A few executives have hinted that players hit by the cap might turn to offshore sites where they do not have to report taxes.

The gaming industry faces uncertainty at a tricky time. Big companies like FanDuel and DraftKings plan to launch prediction markets with different tax rules than regular betting products. Experts think these new tax setups might draw some customers away from normal sports betting. This could make the fallout from the deduction limit even worse.

More lawmakers have backed the effort, but passing it remains tough. Some politicians from both sides say they did not know about the deduction change when they voted for the bigger bill. Now they are open to undoing it. However, obstacles still stand in the way. Attempts to add the fix to larger bills, like the yearly defense spending bill, have already failed this year.

If lawmakers do not take action before adjournment, the new rules will go into effect as planned. Financial experts watching this issue say that the tax hit on people who bet a lot could lead to casinos, sportsbooks, and related businesses seeing billions less in activity in 2025.