FAIR Bet Act Gains Momentum

The odds of the federal gambling deduction for itemized tax returns being restored to 100% improved this week with a prominent House Republican lending his name to the FAIR Bet Act.

Gambling deduction FAIR Bet Tom Cole

US Rep. Tom Cole has signed on to support the restoration of the gambling deduction for federal tax purposes. Cole is now cosponsoring the FAIR Bet Act, led by US Rep. Dina Titus. (Image: X)

Led by US Rep. Dina Titus (D-NV), the FAIR Bet Act, or Fair Accounting for Income Realized from Betting Earnings Taxation Act, would fix a tax implication of the Republicans’ One Big Beautiful Bill (OBBB) that reduced the gambling deduction to 90%. The change, effective for the 2026 tax year, means a gambler who wins $100K but also loses $100K would still need to pay federal taxes on $10K of phantom income.

Titus’ FAIR Bet Act has widespread, bipartisan support, with 23 cosponsors. Thirteen are Democrats, with 10 Republicans. The latest GOP House member, however, is perhaps the most important.

Role of Tom Cole and House Committees

On Thursday, US Rep. Tom Cole (R-OK) lent his name to the FAIR Bet Act. Cole has served in Congress for more than two decades and is the chair of the House Appropriations Committee. One of the most powerful House committees, Appropriations is responsible for reviewing measures that impact federal funding.

Exciting news for the FAIR Bet Act and the gaming community. The chairman of the House Appropriations Committee has just co-sponsored my legislation to rightfully restore the tax code for gamers. Nobody should have to pay taxes on phantom income. Let’s get this done,” Titus wrote on X.

The FAIR Bet Act is a simple one-page bill. It would strike “90 percent” and insert “100 percent” in Section 165(d) of the Internal Revenue Code, as amended by the One Big Beautiful Bill.

Titus’ congressional colleague from Nevada, US Sen. Catherine Cortez Masto (D), has introduced companion legislation in the Senate called the FULL House Act, or the Facilitating Useful Loss Limitations to Help Our Unique Service Economy Act.

Gambling Deduction Backstory

For decades, gamblers filing itemized federal tax returns have been able to deduct their losses against their winnings, similar to how a business is allowed to deduct its expenses against its income. During the OBBB’s consideration in the Senate Finance Committee, the gambling deduction amendment to 90% was tacked on.

The Senate Finance Committee is chaired by Sen. Mike Crapo (R-Idaho). Proponents of the 90% cap say the limit ensures that high-volume gamblers are required to report a minimum taxable gain.

The FAIR Bet Act remains with the House Ways and Means Committee. Chairman Jason Smith (R-MO) has expressed a willingness to consider the bill, but has not yet scheduled the legislation to be heard.

“While the change may appear minor, it will have significant and harmful consequences,” said Titus. “It unfairly burdens professional gamblers and casual players alike and will inevitably drive players toward offshore and unregulated markets where consumer protections are nonexistent, thereby undermining responsible gaming efforts nationwide.”

Player Concerns and Potential Impact

What amazes me is that we only are getting opinions on what "wins" are. most people's opinion is that it is w2g's that are wins but the IRS definition is - a win is any monies received from a bet, W2g's are merely a triggered event that forces gamblers to acknowledge to the IRS that they have made a large win. So if you have $1,000,000 coin out for 2026, you will have to show $100,000 of gaming income regardless of your loses. If this new law holds many people will lose their life savings.