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Senator's opposition could kill momentum towards raising federal gambling tax deduction
US Senator James Lankford has expressed that he opposes legislation to elevate the current allowance for gaming loss deductions from income taxes.
A push to reverse a change in the federal tax code that caps deductions for gaming losses at 90% may have already seen its zenith. United States Sen. James Lankford (R-Okla.) has voiced his opposition to legislation that would restore the previous threshold of 100%, meaning the heretofore theoretical ramifications for the gaming industry in the country could become reality.
Lankford shares position on income tax deduction change
Lankford spoke with Punchbowl News to communicate his position on multiple proposals in the US Congress regarding income tax deductions for gaming losses. In the interview, Lankford clearly stated that he was opposed to the premise and called it "a pretty minor change in that tax policy."
The current statute limits non-professional gamblers to writing off up to 90% of their gaming losses on their personal income tax returns starting with tax year 2026, provided that the taxpayers itemize their deductions and do not attempt to write off more in losses than the amount they won while gaming during the year. That change was made in 2025.
Lankford's opposition could prove to be substantial given that proposals from US Reps. Andy Barr and Dina Titus have failed to gain traction in the United States House of Representatives. At the time of this writing, no Senate companion has been filed.
For many of the best online casinos in the US, the 90% threshold remaining in place might have undesirable consequences.Â
Potential ramifications of the lower deductions cap
Simple math shows how this change doesn't favor people who play online casino games for real money. For example, a player who reports $10,000 in winnings and the same amount in losses would owe tax on $1,000 of that money even though they did not actually realize any of that money as income.
As a result, people in states like Michigan, New Jersey, Pennsylvania, and West Virginia may be less likely to play at online casinos or enjoy any other form of gaming. To help restore lost revenue, operators may need to make more casino bonus codes available to present value to reticent consumers.
Even taking advantage of offers like the Fanatics Casino promo code will not completely cancel out the potential tax liability of gaming, though. That's because taxpayers still have to report any losses or winnings related to bonus play.
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If Lankford persists and the status quo remains, casinos and players alike will need to navigate this new normal.
