US Gambling Losses Tax Change One Step Closer

A restoration of the 100 percent tax deduction on gambling losses is one step closer, thanks to a Congresswoman’s provision.

Rep. Dina Titus (R-Nevada) got her provision on restoring the full tax deduction on gambling losses through the House Ways and Means Committee yesterday. The move would reverse the change to gambling loss deductions, which were reduced to 90% last year.

The move came after “14 months of fighting” to get what Titus called a “commonsense, bipartisan fix” through the committee.

Gamblers Avoid Tax on ‘Phantom Money’

Congresswoman Titus attacked last year’s tax change as a “ruse”, added to Donald Trump’s One, Big, Beautiful Bill Act.

The act set out provisions for tax cut extensions to individual income and estates, as well as tax relief on tips and overtime. However, the gambling loss tax exemption was also included.

Titus had brought up the new tax rule last year with the FAIR BET Act introduction. However, it took the new Digital Asset Tax Certainty Act to strengthen her cause. The new tax rule will be included in the Act.

The Act would “ensure gamblers across the nation do not pay this tax on phantom money they never won,” Titus said. She also added her disappointment that the “House committee [took] so long to take action.”

According to Titus, the move has some prominent backers, including DraftKings, MGM, FanDuel, and Caesars.

How US Betting Tax Works

The IRS considers all gambling winnings taxable as regular income. Federal income ranges from 10–37%, but deductions on gambling losses are permitted through a tax return. Paying tax on losses would incur extra costs with potentially nothing back in return.

Legally, sportsbooks and casinos must withhold a flat 24% in federal income tax on any wins. However, there are certain thresholds on the trigger amount, usually over $5,000 for lottery/sweepstakes, or from sports betting and casino play if the payout is 300 times the stake or more.

Additional state taxes on gambling winnings also apply. However, Nevada imposes a 0% state tax on any wins. Other states are much harsher and already impose tax on gambling losses.

Nevada Gaming Revenue Holds

Nevada will be pleased that gamblers hold on to more of their winnings, or rather – paying out less in tax on losses.

The gambling-centric state has a 0% tax on consumer gambling winnings. Despite reports of slowdowns in Las Vegas’s fortunes, monthly revenue takes are holding.

The most recent monthly report showed a 2.07% year-over-year increase in gambling revenue for Nevada, to $1.39 billion. It meant monthly revenues for gaming were up for three consecutive months.

Additionally, gaming win across the state of Nevada was up 2.59% on last year to over $16 billion.

Nevada Tax Row Spills into Prediction Markets

Keen to protect its industry and tax-paying players, Nevada has also been gunning hard for prediction markets.

Earlier this month, the Ninth Circuit Court of Appeals ruled in Nevada’s favor against Kalshi. The Nevada Gaming Control Board has been keen to crack down on prediction markets who offer non-state regulated “sports betting”. Nevada says sports contracts are equivalent to sports betting and should be taxed and regulated as such.

With a ruling on sports predictions and a reverse on gambling loss tax deductions, this month has been a win-win for Nevada.