WASHINGTON — Some top Republicans are regretting that they inserted a tax hike on gamblers into President Donald Trump’s megabill, with several lawmakers who supported the legislation now calling for rolling back that policy.
Rep. Jason Smith, R-Mo., the chair of the tax-writing House Ways and Means Committee, told NBC News that the provision was a “mistake” and needs to be undone.
“It was definitely not something that we did in the House. I don’t understand why the Senate decided to do something like that,” Smith said in a brief interview Wednesday. “I’m interested in making sure that we fix the Senate’s mistake.”
The new law cuts the tax deduction on “wagering losses” from 100% to 90% of losses starting in 2026, disrupting the current dynamic where bettors can offset losses with gains and pay taxes only on net earnings. The new policy could tax gamblers even in years in which they break even or net-out losses.
For instance, a bettor who wins $100,000 and loses $100,000 in the same year would be stuck with a taxable income of $10,000.
“It would be potentially catastrophic for the industry as it would disproportionately affect high volume gamblers,” said Jack Andrews, a professional sports bettor who goes by that alias.
“Those high volume players are the lifeblood of most casinos,” he added. “If they realize they could lose, and still have taxable income to pay that they didn’t make, they’ll stop playing. Or find ways to play that don’t generate a paper trail.”
Andrews said the new law “could result in players losing money gambling, but still owing taxes on ‘income’ they didn’t make.”
The nonpartisan Congressional Budget Office estimates the gambling tax change will raise $1.1 billion over a decade.
At least a couple of Republican senators who supported the megabill — which passed with only GOP votes — want to undo the gambling tax.
Sens. Ted Cruz of Texas and Bill Hagerty of Tennessee have signed on to legislation to roll it back, alongside Nevada’s two senators, Jacky Rosen and Catherine Cortez Masto, both Democrats. The bill, written by Cortez Masto, is called the Facilitating Useful Loss Limitations to Help Our Unique Service Economy Act — or the FULL HOUSE Act.
“It’s unfair. It makes no sense,” Cruz, who plays poker in his spare time, said of the tax provision in an interview.
“The income tax is designed to tax actual income,” he said. “For example, playing poker for profession — not allowing them to deduct their losses means they’re paying taxes not on their actual income.”
“I think we should fix it,” he added.
Cruz said most Republicans voted to pass the gambling tax change without knowing about it, a damning indictment of the legislative process for the bill.
“Nobody really takes responsibility for introducing it,” Cruz said. “None of us knew about it. It’s a very big, beautiful bill, and so there are lots of provisions there that at the end, things were moving very fast. I don’t know of anyone who was aware of the provision at the time it passed.”
The provision was introduced in the mid-June version of the bill, with Sen. Mike Crapo, R-Idaho, overseeing the tax portion as chair of the Senate Finance Committee.
And he, too, is open to revisiting it.
