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Read Full BioFormer Vice President Mike Pence is lobbying against a push to make gambling losses 100% tax-deductible.
An amendment to President Donald Trump’s One Big Beautiful Bill (OBBB) means gamblers can only deduct 90% of losses from winnings before paying tax on any remaining funds.
The tax change is set to take effect at the start of next year, but lawmakers in the Senate and the House aim to reinstate the ability of gamblers to deduct all losses before that happens.
The Advancing American Freedom Foundation (AAFF), a conservative think tank led by Pence, is advocating against the reversal.
A memo released by the AAFF states, “Americans have the freedom to gamble on sports, but why should American taxpayers foot the tax bill for sports gambling?
“Nearly all gamblers lose money, leading to further financial, health, and family problems. Congress should encourage a pro-growth tax code by declining to reinstate full expensing for gambling losses. Legalized sports gambling ultimately makes life more difficult for many Americans while funding the growth of government.”
No Gambling Losses Should Be Deductible, Says AAFF
The memo goes a step further and suggests that gambling losses should not be deductible at all. It reads, “Until the One Big Beautiful Bill, America’s tax code actively encouraged gambling by offering full expensing for gambling losses.
Then goes on to add, “Gambling losses should not be deductible at all.”
Advocates for reversing the change, such as Rep. Dina Titus, who introduced the FAIR BET Act in the House to repeal the tax, have argued that it is unfair. Gamblers who win $100,000 but also lose $100,000 would only be able to deduct $90,000 of the losses and therefore be liable to pay tax on $10,000 despite not generating any profit.
The AAFF memo, however, argues that the result would be a reduction in the number of Americans who gamble.
Gambling Funds Government While Harming American Families
The group also argues that while gambling is a source of funds for the government, it is damaging American families. It cites several tax increases across states in the country, including the controversial decision in Illinois to add a tax on every bet placed.
Sportsbooks have responded to the tax by adding surcharges on bettors. This week, BetRivers joined Fanatics, DraftKings, and FanDuel in announcing it will pass the tax directly onto the user.
Sports betting companies have opposed the tax increases, arguing that it will drive users to offshore sportsbooks, rather than leading to Americans reducing the amount they gamble.
Unregulated gambling platforms accounted for 74% of the industry’s overall revenue last year, up from 71% in 2023. Rep. Titus believes this will increase if the tax change is not reversed, stating, “We should be encouraging players to properly report their winnings and wager using legal operators. The change will only push people to not report their winnings and to use unregulated platforms.”
Bill Seeking to Reverse Gambling Tax Blocked in Senate
In addition to the FAIR BET Act, Democratic Sen. Catherine Cortez Masto introduced the FULL HOUSE Act in the Senate, which also aimed to reverse the tax change.
Cortez Masto had hoped to accelerate the bill through the legislative process, but Republican Sen. Todd Young blocked the bill from advancing. Young said he supported the policy, but would only vote in favor of advancing the legislation if it included clauses related to religious college endowments and other tax adjustments that Democrats previously rejected.
As it stands, both bills are still under consideration in Senate and House committees. Still, the AAFF’s call to reject the proposals may lead to further challenges in passing any legislation that reinstates the 100% loss deduction for gamblers.
