One Gambling Losses Tax Deduction Bill Falters, Another Moves Forward

[Wandering Eyes]

One bill designed to restore the gambling losses tax deduction to 100% is languishing in committee and has, for all intents and purposes, politically flat-lined.

The giant tax and spending bill signed into law by President Donald Trump in July caps gambling loss deductions to 90% of winnings (from 100%)–a provision set to go into effect next year.

Industry leaders have warned this rate change could hit horse racing hard through reduced revenues from gambling dollars. Those jurisdictions with no supplemental purse revenues, like California, are especially vulnerable to the impacts from Trump's spending bill.

At the same time, new language was recently added to another bill that seeks to restore the gambling losses tax deduction to 100% and has moved to the House Ways and Means Committee.

“I'm really happy to see congressman Barr decided to sponsor the bill. I spoke to him about it and urged him to do so, and I know a lot of other people did as well,” said Damon Thayer, a veteran lawmaker with 22 years serving the Kentucky State Senate, about the “Winnings And Gains Expense Restoration Act of 2025” (or the WAGER Act), introduced by Kentucky Congressman Andy Barr.

“It's pretty alarming the Senate put that 90% deduction in there in the first place so now we're in a triage situation,” said Thayer. “Let's hope it gets some momentum.”

Until recently, the bill had only the one co-sponsor, Texas congressman Troy Nehls, a Republican. According to a spokesperson from Barr's office, Kentucky congressman Morgan McGarvey, a Democrat, is now a co-sponsor on the bill.

“As Chairman of the Congressional Horse Caucus, I'm proud to lead the WAGER Act in the House. This is a bipartisan bill, and I'm confident we can get it across the finish line–just as we did with the Horseracing Integrity and Safety Act, the most transformational reform to Thoroughbred racing in a generation, and with the restoration of bonus depreciation in the Big Beautiful Bill, which helped fuel a record yearling sale at Keeneland. I'll keep fighting until we secure this victory for the industry and for Kentucky,” wrote Barr, in a statement to TDN this week.

Barr is in the middle of a tough fight for Mitch McConnell's soon-to-be-vacant seat in the Senate. He squares off against two other Republicans in the primary: former Kentucky Attorney General Daniel Cameron and first-time candidate Nate Morris.

The other bill seeking to restore the gambling losses tax deduction to 100% is the Fair Accounting for Income Realized from Betting Earnings Taxation (FAIR BET) Act, introduced by representative Dina Titus, a Democrat from Nevada.

“While the FAIR BET Act had gained support on both sides of the aisle, Rep. Titus's bill has languished in the Ways and Means Committee, most likely because of the current Republican trifecta in the House, Senate, and the Presidency,” wrote the NTRA in a press release this week.

“Barr's bill is seen as having a better chance to pass, because of the support in Congress Republicans currently enjoy,” the NTRA added.

The WAGER Act could be passed either as an attachment to a larger piece of legislation or as a standalone bill. Titus tried to amend the FAIR BET Act to the 2026 National Defense Authorization Act (NDAA).

“As an observer, I would say there's a better chance that this legislation gets included in another package of related tax or appropriation matters,” said Thayer, of the WAGER Act.

“But I still think it's really important that Congressman Barr, a member of the majority party, file the bill because he'll be a champion for the issue, and hopefully, figure out a way to get it passed,” he added.

Even if the tax deduction rate is not restored before the end of this year, that's not the end of matters, however.

Tom Rooney, NTRA president and CEO, told the TDN Thursday that if Congress changes the rate back to 100% during the course of 2026, it will work retroactively to the beginning of the calendar year.

Rooney and Thayer both said they have not heard of any serious opposition to the WAGER Act.

Though Rooney hasn't seen any estimates of the potential shortfalls to horse racing if the 90% rate goes into effect, he expects it to have serious ramifications for the industry's revenues, he said.

Rooney added, “we're taking this very seriously.”

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