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A Senate effort to reverse a new federal gambling tax rule is facing a fresh obstacle after Sen. James Lankford (R-Okla.) signalled opposition to legislation that would restore the long-standing ability for taxpayers to deduct 100% of gambling losses against winnings (up to the amount of winnings).
The fight started after a change that took effect on Jan. 1, 2026, following Congress’s approval of the One Big Beautiful Bill Act in July 2025. Under the new rule, gamblers who itemise can only deduct 90% of their losses against their wins. The result is what critics call “phantom income”, taxable winnings that a player may not actually have after netting out losses.
Lankford told the press he views the 90% cap as a small policy adjustment and does not see the case for reopening the issue. According to coverage of his comments, he said:
“It’s not an unrealistic change,” he said, adding: “It’s a pretty minor change in that tax policy.”
The rule change now shaping the debate
His comments are notable because they place a Senate Republican on the record against a fix that has drawn support from gaming-state lawmakers, parts of the industry, and a bloc of House members in both parties.
Lankford’s home state has one of the largest regulated gaming footprints in the country. A recent state compliance report shows that, as of the end of fiscal year 2025, 33 tribes operated 138 Class III gaming facilities under Oklahoma’s compacts.
The bipartisan push to restore 100%
The change drew attention after it was enacted, in part because the gambling provision was not widely understood outside tax-policy circles while the broader bill moved quickly through Congress. Reports claim that the rule was “buried” in the larger package, and that some lawmakers said they had not focused on it until late in the process.
The main House vehicle for a reversal has been Rep. Dina Titus’ FAIR BET Act, which would reinstate the prior standard and restore full loss deductibility (again, only up to winnings, and only for itemisers). Titus has pressed the Ways and Means Committee to move quickly, arguing the new rule taxes gamblers “on money they did not win.”
In the Senate, Nevada Democrats have been among the most vocal advocates for a fix. Sen. Catherine Cortez Masto (D-Nev.) attempted to fast-track a repeal last year, but the effort was blocked when Sen. Todd Young (R-Ind.) objected to unanimous consent, stalling the proposal and leaving the 2026 rule intact.
In July, Sen. Catherine Cortez Masto (D-Nev.) argued on the Senate floor that without a fix, gamblers would be:
“literally paying taxes on money they don’t have. This makes no sense, and it will do irreparable harm to our country’s gaming industry if it takes effect, especially in Nevada.”
Cortez Masto’s first attempt to fast-track a repeal in 2025 was blocked on procedural grounds when the chamber could not reach unanimous consent.
Senate hurdles wane as Finance Committee politics come into view
With the 90% cap now in effect for the 2026 tax year, the next meaningful developments are likely to be legislative: whether House leadership schedules movement on the FAIR BET Act, and whether Senate supporters can line up a path that avoids the same procedural trap that derailed the July 2025 attempt.
The politics now run through the Senate Finance Committee, where Lankford serves and where the provision’s authorship has been tied to Chairman Mike Crapo (R-Idaho) in trade reporting.
That leaves repeal advocates facing a 2026 landscape where the policy is already effective, pressure is rising from gaming constituencies, and at least one Senate Republican is signalling he’s not inclined to unwind the change.
Source: Yahoo Finance
