button in SafariKondler & Associates Breaks Down Recent IRS Talks Regarding the 90% Gambling Loss Rule
On the morning of Friday, July 17th, 2026, the IRS held an open hearing regarding the 90% gambling loss ruling through the Big Beautiful Bill (BBB), which is being put into effect for the 2026 tax year.
The IRS heard from various speakers such as Representative Dina Titus – Nevada District 01, Joshua Hamlet – Clarity Tax Counsel PLLC, Mike Vanaki – American Gaming Association, Gary Kondler – Kondler & Associates, and various amateur and professional gamblers. All speakers had the same goal in mind, expressing to the IRS that the 90% loss on gambling is unfair to all gamblers, especially those who do not earn a gambling profit throughout the year.
"The gambling industry is looking to face a decline in numbers because of the fear set in for many gamblers because of the 90% rule."
The recurring theme among the speakers was the word “phantom income.” Phantom income refers to money that is taxable even though the money was not actually received by the taxpayer. This raises a large concern for gamblers who are at a net loss for the tax year yet still are subject to income tax on gambling due to the 90% loss deduction cap on all gambling income. The gambling industry is looking to face a decline in numbers because of the fear set in for many gamblers because of the 90% rule.
Dina Titus noted that, “the domestic gaming industry supports 1.8 million jobs, $104 billion in wages and salary, and $53 billion in tax revenue for state and local government.” Other speakers cited that 2025 saw some of the gambling industry's strongest numbers but warned that those figures are likely to decline because of the BBB's 90% ruling, arguing that legal businesses should not be adversely affected by IRS rulings.
While there are alternatives to the 90% deduction, such as the session method, these approaches, although permitted at the federal level, have limited guidance at the state level. Additionally, the use of session methods will likely receive pushback from the IRS, creating more work in the creation and response of letters for both the IRS and taxpayers alike.
Hearing from both gaming industry professionals and individuals directly affected by the provision created a strong sense of concern and frustration toward the IRS. Many of those who spoke described gambling as a legal hobby but explained that the provision could force them to pay significantly higher taxes, making it much more difficult and expensive to continue participating. This also raised the question of why people should be financially penalized for taking part in an entirely legal activity.
At Kondler & Associates, we highlighted the executive orders that correlate with the new proposed regulations under the BBB. Executive Order 13563 states that regulations should be designed in a way that promotes predictability and consistency, allowing individuals and businesses to understand their obligations and plan accordingly.
There is a current concern as to whether the proposed BBB revisions provide sufficient predictability.
Executive Order 12866 was implemented to reform regulatory systems only when doing so improves economic performance, which we believe is not the case with this provision of the BBB.
We also highlighted the structure of the session method and raised questions regarding the definition of the term “session.”
The increased IRS staffing needed to produce letters may also be inconsistent with the objectives of this executive order.
We also highlighted the structure of the session method and raised questions regarding the definition of the term “session.” Lastly, we highlighted the need for clarification regarding who is responsible for the 10% loss reduction when selling actions under partnership agreements.
There was one simple ask by all speakers during the hearing: return the loss deduction back to 100% of all gambling winnings that can be offset by gambling losses, repealing the entirety of the provision made through the BBB. The revenue the IRS is expected to generate from this ruling is immaterial compared with the time, effort, and expense the agency will incur in issuing notices, drafting correspondence, and administering the process. It is unfair to compliant taxpayers to face the implications that arise due to the 90% loss deduction cap through the BBB.
PokerNews will continue to monitor any developments regarding the 90% gambling loss ruling through the Big Beautiful Bill (BBB) and update the community accordingly.
Players can also contact the firm directly via Kondlercpa.com.
