Oklahoma, January 06: Opposition from an Oklahoma senator is emerging as a new obstacle to bipartisan efforts to restore a full federal tax deduction for gambling losses, leaving gamblers facing higher tax bills and prolonging uncertainty for the gaming industry.
Republican Senator James Lankford said earlier this week that he opposes legislation that would reinstate the 100% deduction of gambling losses against winnings, according to remarks reported by Punchbowl News. His comments mark one of the first explicit statements of opposition from a U.S. senator to the proposal, which has drawn support from lawmakers in both parties and both chambers of Congress.
Under a change that took effect this calendar year, gamblers who itemize their tax returns can deduct only 90% of their losses against winnings, down from a prior 100% allowance. As a result, a gambler reporting $100,000 in wins and $100,000 in losses would owe tax on $10,000 of income.
The change was enacted as part of the sweeping One Big Beautiful Bill signed into law in July last year. The gambling deduction provision was not included in the original House-passed version but was added late in the legislative process to a Senate-backed version that the House ultimately accepted.
In response, Democratic Representative Dina Titus introduced legislation to restore the full deduction. The bill has attracted nearly two dozen cosponsors from both parties. Republican Representative Andy Barr has introduced a nearly identical measure, and the two lawmakers have cosponsored each other’s bills in hopes that a Republican-led version could gain more traction in Congress.
Critics of the 90% threshold, including Titus, Barr and gaming industry stakeholders, argue that the rule taxes so-called “phantom” income by levying taxes on money gamblers did not actually earn. While the provision directly affects only a small share of taxpayers who itemize gambling losses, industry representatives warn it could discourage high-value gamblers from participating in legal markets.
Some analysts estimate the change could lead to billions of dollars in direct and indirect economic losses for casinos and sportsbooks. Oklahoma, Lankford’s home state, has more than 100 regulated gaming facilities, the highest number per capita of any U.S. state.
Despite early bipartisan support, the effort to reverse the deduction change has stalled. Representative Jason Smith, who chairs the committee with jurisdiction over the legislation, has not scheduled a vote, and attempts to attach the measure to other bills have failed. A previous effort to restore the deduction by unanimous consent was also blocked.
Six months after the change was signed into law, the legislation has made little progress, leaving gamblers facing higher tax burdens. Supporters in Congress and the gambling industry continue to describe the tax as unfair, warning that prolonged inaction could weigh on gambling activity and industry revenues.
