US Congress Moves to Restore Full Gambling Loss Tax Deductions 2026

Legislative Momentum Builds

A pivotal moment is unfolding in U.S. tax policy affecting the gambling industry, as Congress advances a package that includes elimination of the controversial 'One Big Beautiful Bill' provision currently limiting gambling loss deductions.

The proposal, which gained significant traction this week, would restore the ability of individual taxpayers to deduct 100% of gambling losses against gambling winnings—reversing limitations that have constrained this deduction in recent years.

What's at Stake

Under current rules, gambling loss deductions face restrictions that reduce their utility for frequent players. Full restoration would allow players to offset all losses against any gambling income, potentially making recreational and professional gambling more economically attractive from a tax perspective.

For the gaming industry, the implications are substantial. Lower effective costs of gambling—due to enhanced tax deductions—could expand the addressable market by making play more attractive to tax-conscious high-value players and professionals.

Path to Passage

The inclusion of this provision in a broader legislative package increases its likelihood of passage, as it becomes part of omnibus negotiations rather than a standalone measure. Operators should monitor congressional voting schedules and committee progress as the package moves through committees and toward floor votes.

Industry groups have signaled support for the deduction restoration, viewing it as a normalization of tax treatment relative to other forms of investment activity. The Congressional Budget Office estimates the revenue impact will be closely scrutinized, but the momentum suggests serious legislative appetite for this change.