Cap on gambling loss deductions repealed before 2027?

Prediction markets put the probability at 16%: Cap on gambling loss deductions repealed before 2027. Currently, markets see this as unlikely (16% YES). This suggestion stands in stark contrast to the effects of the major legislative Republican tax bill enacted in July.

What’s Happening

The market's 16% probability reflects the entrenched status of the cap on gambling loss deductions, a provision enacted under the One Big Beautiful Bill Act (OBBBA) in July 2025. That law, effective January 1, 2026, limits itemized deductions for wagering losses to 90% of winnings, down from the previous 100% allowance, and restricts the tax benefit to 35 cents per dollar deducted for top-bracket filers. The change directly impacts high-volume bettors and poker players, who now face a permanent tax liability on a portion of their losses. Since the law is already in force for the current tax year, any repeal would require new legislation, a hurdle that keeps the YES probability low despite active lobbying efforts. [H&R Block, Jul 14]

The most significant push for repeal came in May 2026, when UFC CEO Dana White sent a formal letter to President Donald Trump urging him to reverse the cap on gambling loss deductions. White’s intervention, reported by CNBC and Sportico, briefly moved the prediction market, though the probability has since settled back to 16%. The letter highlighted the provision’s disproportionate impact on professional gamblers and the broader sports betting industry, which argues the 90% cap effectively taxes gross winnings rather than net income. However, the White House has not signaled any legislative or executive action, and the provision remains embedded in the broader GOP tax framework passed a year earlier. [CNBC, May 14]

Looking ahead, the key test is whether any repeal effort gains traction in the 115th Congress before the 2027 deadline. The provision was a revenue-raising measure within OBBBA, and undoing it would require offsetting budget cuts or new taxes, a politically difficult trade-off. A December 2025 Kiplinger report noted that while there have been proposals to repeal the cap, none have advanced past the discussion stage. The market’s 84% NO probability suggests traders view the current political gridlock as insurmountable, especially given that the provision only affects the highest-income taxpayers, limiting its political urgency. Any meaningful shift would likely require a new presidential directive or a standalone bill with bipartisan support, neither of which appears imminent. [Kiplinger, Dec 16]

Traded on Polymarket — $71K Volume

Lower-volume market on Polymarket ($71K). Wider spreads expected — enter with limit orders and be aware of slippage risk. Currently 18c YES.