NTRA Calls for Restoring Full Deduction on Winnings

Citing handle declines this year, the National Thoroughbred Racing Association on July 17 sent a letter to United States Treasury Secretary Scott Bessent calling on the Treasury and the Internal Revenue Service to back legislation that would restore the gambling loss provision to its previous level.

Legislation that went into effect this year lowered the percentage of gambling losses a taxpayer could report against their winnings from 100% to 90%.

That marked a significant change from the prior standard. Through 2025, if a bettor had $10,000 in reported gambling winnings they could report up to $10,000 in losses against those winnings. So a player with $10,000 in winnings and $10,000 in losses would have no taxable income from gambling winnings but under the current standard that same player would have to report $1,000 in gambling winnings as they could only report 90% ($9,000) of their losses.

The change to the 90% standard that went into effect for this year was part of the One Big Beautiful Bill signed into law July 4, 2025, and Congress included the change as a way to offset lost revenue from other tax reductions. 

In Friday's letter signed by NTRA president and CEO Tom Rooney, the NTRA notes that: "This law, which had previously remained unchanged for 70 years, could result in individuals paying taxes on net income they didn't realize." That would be the case in the "$10,000 winnings/$10,000 losses" scenario outlined above.

Rooney went on to tie the new standard to reduced pari-mutuel handle for the first half of this year. Pari-mutuel handle is an economic driver for the sport as it produces revenue for tracks and purses.

"Already we are seeing firsthand the negative impacts on the Thoroughbred racing industry," the letter said. "Through June, U.S. pari-mutuel handle is down $44,980,309 (-4.7%) from the corresponding period in 2025."

While wagering on U.S. Thoroughbred racing decreased each year from 2022-2025, if the 4.7% rate of decline seen so far this year continues through year's end, it would mark the largest single-season drop since 2011.

Last year Rep. Andy Barr, a Kentucky Republican, introduced a bill (H.R. 4630) that would restore the previous standard that allowed up to 100% of losses to be claimed against reported gambling winnings. The bill saw the addition of two co-sponsors from the Democratic side and two more from the Republican side. That legislation was referred to the House Ways and Means Committee.

"While the gambling tax deduction changes were disappointing and harmful to our industry, there is a bipartisan effort underway to remedy the situation," the letter continued. "Bills that would return the deduction back to 100% have been introduced in the House of Representatives and the Senate. Legislation in the House has been referred to the House Ways and Means Committee, where Chairman Jason Smith (A Missouri Republican) supports restoring the deduction."

The letter concluded with the aforementioned call for the U.S. Treasury and IRS to urge Congress to restore the previous gambling loss provision.