The Nevada congresswoman whose district includes the Las Vegas Strip is asking Republican House leadership to restore full gambling loss deductions during the final weeks of the current Congress.
Democratic U.S. Rep. Dina Titus sent a letter to House Speaker Mike Johnson and Majority Leader Steve Scalise, both from Louisiana, asking them to include FAIR BET Act language in any "must-pass" legislation as the House returns from recess for its lame-duck session.
If you placed a bet in 2026, you need to know about the new gambling tax law that changes how the IRS treats your wins and losses. Starting with the 2026 tax year, the federal government limits how much of your losing bets you can write off, which means many bettors will owe gambling tax on money they never actually kept.
Whether you play casino games, bet on sports, or buy lottery tickets, the new rules on the gambling losses tax deduction could surprise you when you file your return in spring 2027. This guide breaks down exactly what changed, how the W-2G form works, what Congress may do about it before the end of the year, and what the rules mean for your wallet.
What Is the New Gambling Tax Law for 2026?
The change comes from the One Big Beautiful Bill Act, a major tax law passed by Congress and signed on July 4, 2025. The law rewrote a part of the tax code called Section 165(d), which controls how gambling losses are deducted.
Here is what the new law says, in plain English:
Before 2026: If you itemized your deductions, you could deduct 100% of your gambling losses, up to the total amount you won.
Starting in 2026: You can only deduct 90% of your gambling losses, and that smaller amount still cannot be more than your total winnings.
The rule applies to tax years beginning after December 31, 2025, according to proposed IRS regulations published in the Federal Register. That means the first tax return it affects is your 2026 return, which you will file in early 2027.
Why the 90% Limit Creates "Phantom Income"
Tax experts call the result "phantom income" — money the IRS counts as income even though you did not actually come out ahead. The reason is simple math: if you can only deduct 90 cents of every dollar you lost, the other 10 cents gets taxed as if it were profit.
The $100 Win and $100 Loss Example
- The easiest way to understand the new gambling tax law is with a simple example. Imagine you had a short night at the casino:
- You win $100 on a slot machine. You must report that full $100 as income on your tax return.
- You lose $100 playing blackjack right after. Under the old rules, you could deduct that entire $100 loss and owe no tax.
- Under the new 2026 rule, you can only deduct 90% of your loss: $100 × 0.90 = $90.
- Your taxable gambling income is now $10 ($100 win − $90 deductible loss).
Even though you broke even — you walked in with $100 and walked out with the same $100 — the IRS treats $10 of it as taxable income. Multiply that across a year of betting, and the numbers get much bigger.
A bettor who wins $100,000 and loses $100,000 in a year can only deduct $90,000, leaving $10,000 of taxable income despite gaining nothing. That is the exact example Titus cites in her letter, and it is why she calls the change a tax on "phantom money they never won."
What If Your Losses Are Bigger Than Your Wins?
The deduction is still capped at your winnings, just like before. Your deductible amount is the smaller of two numbers: 90% of your total losses, or 100% of your total winnings. So if you lost $2,000 and only won $500, you can only deduct $500 (your winnings), not $1,800 (90% of your losses). The gambling losses tax deduction has never let you claim a net loss, and that part did not change.
What Is a W-2G Form and Why Does It Matter?
The W-2G form ("Certain Gambling Winnings") is the document casinos, sportsbooks, and other gambling operators send to both you and the IRS when you win enough to trigger reporting requirements. Think of it like a W-2 for gambling winnings.
Key things to know about the W-2G:
It reports your winnings to the IRS. The government already knows about the income on this form, so you must report it even if you lost money overall.
Common triggers include: slot machine jackpots of $1,200 or more, bingo or keno wins of $1,500 or more, poker tournament winnings of $5,000 or more, and any wager that pays at least 300 times the amount you bet.
Federal withholding may apply. Large wins often have 24% federal tax withheld right off the top.
New for 2026: The IRS lowered the reporting threshold for bingo, keno, and slot machine winnings to $2,000 for payments made on or after January 1, 2026, which means more winners will receive W-2G forms.
One important note: you have to report all gambling winnings on your tax return, even small ones that never show up on a W-2G. The form is just the IRS's way of double-checking your numbers.
How to Deduct Gambling Losses on Schedule A
Gambling losses are an itemized deduction, which means you claim them on Schedule A of Form 1040. This creates a catch for many bettors: if you take the standard deduction instead of itemizing, you cannot deduct gambling losses at all.
Here is how the process works:
- Report your total winnings as "Other income" on Schedule 1 of Form 1040. You report the full amount you won, not your net result.
- Gather proof of your losses. Keep a gambling diary or log with dates, locations, types of games, and amounts won and lost. Hold onto losing tickets, slot machine statements, and sportsbook records.
- Itemize on Schedule A. Your total gambling loss deduction goes in the "Other itemized deductions" section of Schedule A.
- Apply the 90% limit. Enter only 90% of your total documented losses, and make sure that number does not exceed your total winnings.
Should You Itemize or Take the Standard Deduction?
For 2026, the standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly, according to the IRS. You should only itemize if your total deductions — including gambling losses, mortgage interest, charitable gifts, and state taxes — add up to more than that. A casual bettor with modest losses will often be better off taking the standard deduction, which means their gambling losses give them no tax benefit at all. Frequent gamblers, on the other hand, may find that a large loss total pushes them over the line and makes itemizing worthwhile.
Who the New Rule Applies To
The 90% limit applies to nearly everyone who gambles and is not a business:
- Casual and recreational gamblers, including casino players and lottery players
- Sports bettors using apps and sportsbooks
- Poker players who gamble as a hobby
- Professional gamblers, whose wagering losses and gambling-related business expenses are also subject to the 90% cap under the new law
- Married couples filing jointly get no relief either: the IRS confirmed that the 90% limit applies to the spouses' combined losses and combined winnings.
Will Congress Reverse the Rule Before Year-End?
Maybe — and the push is now in its most urgent phase. Rep. Titus introduced the FAIR BET Act (Fair Accounting for Income Realized from Betting Earnings Taxation, H.R. 4304) on July 7, 2025, just three days after the One Big Beautiful Bill Act was signed. Her one-line bill would amend the law "by striking '90 percent' and inserting '100 percent.'"
The road since has been bumpy.
House Rules Committee Republicans blocked the FAIR BET Act as an amendment to the 2026 National Defense Authorization Act, and earlier attempts to attach it to spending bills went nowhere.
The breakthrough came on September 16, 2026, when the House Ways and Means Committee voted 38–5 — with support from both parties — to advance a gambling loss deduction fix as Section 701 of the Digital Asset Tax Certainty Act (H.R. 10357). The provision would restore the 100% deduction retroactively to January 1, 2026.
That is where Titus's November letter comes in. With the House returning November 9 for its lame-duck session, she is pressing Speaker Johnson and Leader Scalise to attach the fix to must-pass end-of-year legislation rather than wait for a standalone floor vote.
"Enactment of this bipartisan provision would correct an unfair change in the tax code and provide needed certainty to taxpayers, businesses, and regulated gaming markets across the country," Titus wrote in the letter. She also warned that the 90% cap "unfairly burdens professional gamblers and casual players alike and will inevitably drive players toward offshore and unregulated markets where consumer protections are nonexistent."
"As Congress returns from recess and turns to end-of-year legislation, I respectfully urge Leadership to expeditiously bring a gambling loss deduction fix to the House floor and include it in a must-pass legislative vehicle," she added.
Timing is the biggest hurdle. Even if the House acts, the Senate has not taken up the issue, and any final bill would still need President Trump's signature. If nothing is enacted before the end of the year, bettors will file their 2026 returns in spring 2027 under the 90% rule — and owe tax on phantom income. If you gamble, keep records of every win and loss in 2026. You may need them either way.
