Conservative Think Tank Lobbying Congress to Keep 90 Percent Deduction Rule on Gambling Losses

^{Mike Pence, shown at an AAF event in Raleigh in May 2025, leads the conservative group lobbying to maintain the 90% gambling deduction cap. (Photo: @AmericanFreedom / X )}

A conservative group founded by former Vice President Mike Pence is lobbying members of Congress in opposition to efforts to reinstate the 100 percent tax deduction on gambling losses up to the amount won in a given year.

The Advancing American Freedom Foundation (AAFF) issued a memo to congressional offices urging lawmakers to keep the 90 percent deduction limit that was included in the One Big Beautiful Bill Act (OBBBA) which was signed into law on July 4, 2025.

AAFF: ‘Gambling Losses Should Not Be Deductible at All’

The effort was first reported by Punchbowl News, which obtained a copy of the memo. 

While the tax changes in OBBBA will impact all forms of gambling beginning in 2026, the AAFF memo focuses primarily on the expansion of sports betting. The memo argues that the policy change will be a net benefit to Americans. 

“Until the One Big Beautiful Bill, America’s tax code actively encouraged gambling by offering full expensing for gambling losses,” reads the AAFF memo. “Gambling losses should not be deductible at all.” 

As the memo explicitly notes, this would lead to situations where a gambler who broke even – or who even lost money – owing taxes on their gambling activity. However, the AAFF argues that this isn’t a problem, as gambling activity is different than other business activities.

“The gambling gloss deduction is far different than business expense deductions for income tax purposes,” the memo says. “Net profit reflects real economic output unlike gambling endeavors.”

In addition, the memo outlines another reason for supporting the 90 percent rule: the fact that the tax consequences could encourage Americans to stop gambling.

“Americans have the freedom to gamble on sports, but why should American taxpayers foot the tax bill for sports gambling?” the memo asks. “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.”

Titus Introduces Bill to Roll Back Tax Changes

While that reasoning might fit the political and policy goals of the AAFF, it hasn’t sat well with either professional gamblers or those in the gaming industry who fear the severe tax consequences could discourage causal gambling as well. 

Those concerns have fueled attempts to roll back the gambling deduction rules in the OBBBA and reinstate the 100 percent deduction on losses. Most notably, Representative Dina Titus (D-Nevada) introduced the FAIR BET Act in the week after OBBBA passed, which would once again allow for full deduction of losses and expenses up to the amount a gambler won each year.

“My FAIR BET Act would rightfully restore the full deduction for losses so gamblers don’t pay taxes on money they haven’t won,” Titus wrote in a statement announcing the bill. “This common-sense legislation will bring fairness back to gaming taxation, making sure that gamblers can fully deduct losses when they report their winnings.”

Other paths to potentially reversing the tax changes include through a technical corrections bill to OBBBA, or via inclusion in a second reconciliation bill this fall.