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.
“Senator Crapo is open to receiving feedback from affected stakeholders and learning more about industry reporting and compliance,” a Crapo spokesperson said.
“To comply with the rules of reconciliation, every provision from the Tax Cuts and Jobs Act needed to be modified to create a budgetary effect. In order to retain the gambling loss provision, it was changed to 90 percent,” the spokesperson added. “While the committee heard from gaming associations on other provisions after text was released on June 16th, there were no concerns raised with lowering the threshold.”
The blowback from bettors has grown since Trump signed the bill into law on July 4, and Democrats have added it to their list of grievances with the One Big Beautiful Bill Act.
“Republicans’ hastily put-together bill is full of provisions that are completely counterproductive and harmful to Americans," Cortez Masto said. "The provision limiting the wagering loss deduction will have a negative impact on Nevada, and it’s one of the many reasons I voted no."
On July 10, she sought unanimous consent on the Senate floor to pass the FULL HOUSE Act but was met with an objection from Sen. Todd Young, R-Ind., that prevented speedy passage. Her office said she will “continue to explore all options available to restore the 100% dedication for gambling losses and protect Nevada’s gaming and hospitality industries.”
If the tax change isn’t undone, it will come as a shock to some bettors, as “many of them wouldn’t realize this until they do their 2026 taxes, which would be early 2027,” Andrews said.
But reversing it won't be so easy.
Senate Majority Leader John Thune, R-S.D., poured cold water on the proposals from some Republicans to roll back parts of the bill.
Asked by NBC News on Tuesday whether measures offered by his colleagues to undo the Medicaid cuts and gambling tax were going to succeed, Thune said flatly, “No.”
“There are members out there who are saying, 'We’d like to do this or that differently.' That’s always the case,” Thune said. “This was a big piece of legislation that had a lot of moving parts. Not everybody got everything they wanted, but at the end of the day, it’s historic in its breadth and the things that it addresses.”
The White House didn't immediately return a message seeking comment on whether Trump is open to revisiting the provision.
Other Republicans say they’re unfamiliar with the industry blowback to the gamblers’ tax change.
“I honestly, frankly, haven’t had a chance to look at it. So I don’t even know what they’re talking about,” Rep. Vern Buchanan, R-Fla., the second-ranking Republican on Ways and Means, said.
On the other hand, Sen. John Cornyn, R-Texas, sounded surprised by how much attention the issue is getting.
“Why do so many people care about the gamblers tax?” he quipped. “I’m kind of agnostic. I don’t, frankly, understand why it’s such a big deal. But happy to look at anything they propose.”
