Here's the lowdown
A new federal rule allows a deduction for only 90% of wagering losses, and only up to wagering gains, for tax years beginning after 2025.
The AICPA wants a safe harbor that generally treats a calendar day or elected 24-hour period as one gambling session across games, casinos and apps.
It also wants the IRS to accept account histories, win-loss statements and player activity summaries as proof of session gains and losses.
A $2,000 win can look like $13,800
Here is a tax result that feels like a bad beat.
A couple has $120,000 of payouts and places $118,000 of wagers. Their economic gain is $2,000.
But if every payout is reported as a separate win and all $118,000 is treated as losses, the new 90% limit allows a deduction of only $106,200. The couple shows $13,800 of net wagering income instead of the $2,000 they actually kept.
That example comes from the AICPA's November 9 comment letter. It shows why a small word now carries a large tax bill: session.
The AICPA wants Treasury and the IRS to define that word, create a safe harbor and say which records taxpayers can use.
The 90% rule changed the math
Before 2026, Section 165(d) limited deductible wagering losses to wagering gains. A taxpayer with $100 of gains and $100 of losses could not use the loss to offset other income, but the full $100 could generally offset the wagering gain if the deduction rules were met.
The law now cuts the allowable loss to 90% of the amount lost, still capped by gains. The Treasury and IRS proposal updates the regulations for that statutory change.
Lose $100 and only $90 may count. That can create taxable income even when a bettor breaks even or loses money overall.
Casual gamblers generally put wagering gains in gross income and claim allowable losses as itemized deductions. Professional gamblers report the activity differently, but the 90% limit applies to both groups. The law also applies the limit to otherwise deductible expenses from a wagering business.
The rule makes the starting numbers more important than ever. If gains and losses are measured wager by wager, the totals can balloon. If they are measured over a reasonable session, the numbers can better reflect what happened economically.
A session puts many bets into one result
The IRS has recognized session-based measurement before, especially for slot play. The idea is simple: do not treat every pull, spin or bet as a separate taxable event. Measure the gain or loss over one continuous period of play.
Modern betting makes the ending harder to spot.
A casino player may cash out and leave. An online bettor can keep money in an app for months, switch sports, move between live and future bets and never withdraw the account balance. Without a clear cutoff, one digital session could appear to stay open all year.
The AICPA proposes a practical default: one calendar day in the taxpayer's time zone or another elected 24-hour period. A taxpayer could support a longer period when the facts fit, such as a multi-day poker tournament.
All wagering during that period would be combined. The method would not reset just because the taxpayer changed games, used another casino or moved from a physical sportsbook to a phone.
The example gets closer to reality
In the AICPA example, measuring the four betting days as sessions produces $18,000 of session gains and $16,000 of session losses.
After the 90% limit, the deductible loss is $14,400. That leaves $3,600 of net wagering income.
The result still exceeds the couple's $2,000 economic gain because 10% of the session losses remains disallowed. But it is far below the $13,800 produced by the gross method.
The measurement choice can also affect adjusted gross income, itemized deductions, income-based phaseouts, Medicare premium adjustments and state taxes. A state that starts with federal adjusted gross income may pick up gross gambling income without giving the taxpayer the same loss deduction.
This is why the debate is not just about one line on a return. The measurement method can spill into several other calculations.
Digital records should count
The IRS's main recordkeeping guidance for gambling dates to 1977. It describes a paper diary supported by items such as tickets, canceled checks and credit records.
Betting platforms now hold much richer data. They can track the amount wagered, winnings, deposits, withdrawals, timestamps and account balances.
The AICPA wants the IRS to confirm that account histories, win-loss statements, player activity summaries and similar operator records can substantiate a session. It also wants session reporting to coexist with gross Form W-2G reporting.
That distinction matters. A Form W-2G can report a qualifying payout. It does not necessarily calculate the taxpayer's net result for the session or the year.
Guidance would set the common clock
Treasury and the IRS have proposed regulations that put the 90% limit into the rulebook. The AICPA says those regulations leave the most practical questions open.
Taxpayers still need to know when one session ends, how to handle multiple wager types and which records the IRS will accept. Preparers need a method they can apply the same way across casinos, sportsbooks and mobile apps.
Until guidance arrives, the safest move is to save more than the tax form. Keep complete account histories, daily activity reports, win-loss statements and evidence of deposits and withdrawals.
The 90% rule is already changing returns. The missing session rule decides what numbers go into that calculation in the first place.
