The FAIR BET Act — the bill that would restore the full gambling loss deduction for American poker players — is being attached to the 2026 National Defense Authorization Act, according to its sponsor, Representative Dina Titus of Nevada.
It is a procedural manoeuvre born of necessity. Every standalone bill introduced to repeal or modify the 90% deduction cap has stalled in committee without receiving a vote in either chamber. Attaching the provision to must-pass legislation is the standard Washington workaround for a policy with broad support and no floor time.
What the 90% Cap Actually Does
For readers who have not followed this closely, the change took effect on January 1, 2026, as part of the One Big Beautiful Bill Act.
Before it, a gambler could deduct losses up to the full amount of their winnings. A player who won $100,000 and lost $100,000 across a year had a net gambling income of zero and owed no federal tax on it. That is the correct treatment for an activity where gross winnings and gross losses are both large and the net is what matters.
Under the new rule, only 90% of losses are deductible. The same player — $100,000 won, $100,000 lost, break-even in reality — can deduct only $90,000 and therefore reports $10,000 of taxable income that does not exist.
Tax practitioners have taken to calling this "phantom income," and the term is accurate. The player has no money. The IRS taxes them as though they do.
Why Poker Players Are Hit Hardest
The provision affects all gambling, but it lands disproportionately on high-volume, low-margin activity — which is precisely what professional and semi-professional poker is.
Consider the arithmetic. A winning tournament player might have $2 million in gross annual buy-ins and cashes producing $2.3 million in gross winnings, for a $300,000 profit. Under the old rule, they pay tax on $300,000. Under the 90% cap, they can deduct only $1.8 million of their $2 million in losses, so they report $500,000 — an additional $200,000 of income that does not correspond to any money they received.
The higher your volume relative to your edge, the worse the distortion. And volume relative to edge is the defining characteristic of professional poker, where win rates are measured in single-digit percentages of money wagered.
The same maths applies to sports bettors and, in a milder form, to recreational players who record significant gross activity. Anyone who has ever been surprised by a W-2G at year end while being roughly break-even in reality now has a considerably larger problem.
Where the Bill Stands
The Fair Accounting for Income Realized from Betting Earnings Taxation Act — FAIR BET — would revert the deduction to 100% of gambling winnings. It has attracted bipartisan co-sponsorship, which is unusual for a gambling-adjacent bill and reflects that the objection is technical rather than ideological: taxing income nobody earned is bad tax policy regardless of what one thinks of gambling.
That bipartisan support has not translated into floor time. Committee chairs control the schedule, gambling tax policy is not a priority for either party's leadership, and the underlying revenue score gives the provision a defender in the budget process.
Hence the NDAA. The defense authorisation passes every year, it accumulates unrelated riders as a matter of routine, and it is one of the few vehicles guaranteed to reach a vote. Whether the provision survives conference is a different question — riders get stripped constantly — but attachment at least gets it onto the table.
There has also been reporting that the administration is weighing a change to gambling winnings taxation, which would open a second path. Neither route is assured.
What This Means for Players
This is not tax advice, and you should speak to a professional. PokerSites.org is not a tax advisory service. What follows is context for a conversation you should be having with someone qualified who understands gambling taxation specifically — a general practitioner is not sufficient here.
Session-based record keeping matters more than it did. How you record wins and losses affects your reported gross figures, and gross figures now drive your liability in a way they previously did not. Players who have been casual about tracking should stop being casual about it.
Professional versus recreational status is now a much bigger fork. Filing as a professional gambler carries different treatment for expenses and self-employment tax, and the relative attractiveness of each status has shifted under the new rule. This is exactly the kind of question that requires a specialist.
The change affects site and format selection at the margins. A player whose volume is high relative to their edge is more exposed than one whose volume is lower. That does not mean playing less — it means that the value of a good rakeback deal and of choosing formats where your edge is largest has gone up, because both improve edge-per-unit-of-volume. Our cash games vs tournaments comparison is worth reading with this in mind.
Nothing here changes if you play in a state without regulated online poker. The federal tax treatment applies to winnings regardless of where they were generated. Players using offshore rooms have the same obligations and, typically, less documentation to work from — another reason to keep your own records. Our US poker guide and safe poker sites page cover the operators that provide usable statements.
The Counter-Argument
It is worth stating the case for the provision, because it exists and is not frivolous.
The revenue argument is straightforward: the cap raises money, and it was included in a bill that needed offsets. Tax policy is full of provisions that are analytically imperfect but fiscally necessary.
There is also a substantive argument that gambling losses have historically enjoyed unusually generous treatment relative to other personal expenditure, and that limiting the deduction brings gambling closer to how other discretionary spending is handled. On this view, the "phantom income" framing is rhetorical — the taxpayer chose to gamble, and the deduction is a concession rather than a right.
The rebuttal, and the reason the bipartisan opposition has held, is that this reasoning works for a recreational bettor and breaks down entirely for someone whose gambling is a business. No other trade is taxed on gross receipts minus 90% of costs. If poker is a business — and the tax code has recognised that it can be for decades — then taxing it this way is a category error rather than a policy choice.
What Happens Next
The NDAA process runs through the autumn. If the FAIR BET provision survives to a signed bill, the deduction is restored; if it is stripped in conference, the 90% cap remains in force for the 2026 tax year and beyond, and the fight moves to next year's vehicles.
Either way, the 2026 tax year is already underway under the current rules, and players filing in early 2027 will do so under the cap unless something changes retroactively — which is possible but should not be planned around.
For the practical question of which rooms produce the documentation you will need, our reviews of BetOnline, Americas Cardroom and TigerGaming each note what account statements are available, and the real money poker hub covers deposit and withdrawal reporting more broadly.
Speak to a specialist. This one is worth the fee.
Sources: Forbes, Kiplinger, NATP, Casino.org