As 2026 state legislative sessions accelerate across the United States, federal and state policymakers are advancing — and, in some cases, retreating from — a wide range of gambling-related proposals. At the federal level, a renewed effort to restore the full deductibility of gambling losses failed to gain traction, while state lawmakers weighed issues ranging from online casinos and sweepstakes bans to collegiate betting restrictions and prediction markets.

Federal amendment blocked again

The U.S. House Rules Committee last week declined to advance an amendment to the Consolidated Appropriations Act, HR 7148, that would have restored the federal gambling loss deduction cap to 100%. The proposal was among roughly 70 amendments not made in order for consideration.

Under current law, gamblers may deduct losses only up to 90% of winnings, a change enacted last year as part of President Donald Trump’s “One Big Beautiful Bill.” Prior to that legislation, taxpayers could deduct gambling losses up to the full amount of their winnings. Representative Dina Titus of Nevada, who has led the push to restore the deduction since the cap was reduced, told the committee that 25 lawmakers had signed on as co-sponsors.

“It’s a fairness issue,” Titus said during the hearing. “You shouldn’t tax people on money that they don’t earn. It’s ghost money, it’s not fair and we can fix it.” The committee’s decision marked the second time Titus’s effort has stalled. In September 2025, the Rules Committee blocked her standalone proposal, the Fair Accounting for Income Realized Betting Earnings Taxation Act, known as the FAIR BET Act.

In Virginia, lawmakers last week debated several gambling-related bills, including proposals that could shape the state’s approach to online casinos. A Senate subcommittee declined to advance SB 118, which would have legalized online casino gaming. The outcome was widely anticipated, as legislators from both chambers have signaled that they are unlikely to consider gambling expansion until the state establishes a unified regulatory structure.

Senator Mamie Locke, the bill’s sponsor, had introduced similar legislation last year but withdrew it for further study. That structural concern gained momentum when the subcommittee combined two bills — SB 195 and SB 558 — that would create a Virginia Gaming Commission. Currently, the state’s gambling sectors are overseen by three separate regulatory bodies. In the House, the General Laws Committee advanced HB 515, which would prohibit the use of credit cards to fund sports betting accounts. House lawmakers are still awaiting action on the proposed gaming commission legislation.

Missouri pauses on collegiate prop bets

The Missouri Gaming Commission last week discussed whether to prohibit college player proposition bets, following renewed calls from the NCAA to ban such wagers nationwide.

The discussion comes amid heightened scrutiny after a federal indictment this month alleged bribery, wire fraud and conspiracy involving players from 17 NCAA Division I teams. Despite the concerns, the commission declined to act, citing the state’s limited experience with legal sports betting, which launched online only in December. “I just don’t feel that I have enough information to grant a request by the NCAA to prohibit this type of sports wagering because I don’t know enough yet,” Commission Chair Jan Zimmerman said, according to the Associated Press.

In Tennessee, Representative Scott Cepicky introduced HB 1885, a bill that would ban online sweepstakes casinos. The proposal is part of a broader national trend, as states move to curb platforms that use promotional or virtual currencies to offer games resembling casino gambling. The bill defines sweepstakes games as those that allow players to use virtual coins — whether purchased, awarded as bonuses or received through other transactions — in games that mirror casino-style gambling, bingo or sports betting.

Tennessee’s proposal follows similar actions elsewhere. An Indiana House committee advanced a sweepstakes ban last week, while lawmakers in Florida, Maine, Maryland and Virginia have introduced comparable legislation. Last year, six states, including New Jersey, New York and California, enacted sweepstakes casino bans, and regulators across the country issued hundreds of cease-and-desist letters to operators.

Tennessee lawmakers have also introduced SB 1831 and HB 1768, which would prohibit online sports betting on college campuses. In New York, Senator Joe Addabbo renewed his long-running effort to legalize online casino gaming. At the same time, other legislators introduced bills aimed at narrowing the scope of legal sports betting. Assemblywoman Carrie Woerner filed A 9636, which would eliminate proposition bets and over/under wagers, limiting sports betting to the final outcome, score or winner of an event.

Assemblyman Alex Bores introduced two additional measures. A 4280 would require operators to implement default betting limits for all accounts, while A 9125 would prohibit sportsbooks from limiting bettors solely based on wagering activity. The latter would still allow restrictions in cases of suspicious behavior or potential problem gambling. Momentum for online gambling expansion appears to have stalled in Indiana. Representative Ethan Manning, a leading proponent of online casinos, saw his iLottery bill removed from the House agenda last week. Manning told the Indiana Capital Chronicle that the measure lacked sufficient support across both political caucuses.

“It didn’t have enough support, really, from either caucus on the concept,” he said. “We’re clearly not ready, as a Legislature, to move any further on any forms of online gambling.” Manning’s HB 1052, which would ban sweepstakes casinos, remains active. Lawmakers declined to add an amendment to legalize online casinos before advancing the bill from committee.

It’s a fairness issue. You shouldn’t tax people on money that they don’t earn. It’s ghost money, it’s not fair and we can fix it

Iowa considers regulating prediction markets

In Iowa, Senator Mike Klimish introduced SF 2085, which would bring prediction market operators under the authority of the Iowa Department of Revenue. The bill would require operators to obtain a $10 million state permit.

Prediction markets have increasingly clashed with state regulators, who argue that the platforms function as illegal sports betting operations. Several of those disputes are now playing out in court. Addabbo, the New York senator, said last week that he also believes prediction markets should fall under state regulation.

Taken together, the developments reflect a fragmented and cautious approach to gambling policy in 2026, with lawmakers grappling simultaneously with consumer protection, tax policy, market innovation and the limits of existing regulatory frameworks at both the federal and state levels.