Ok, so you just started gambling and you managed to grab a couple of wins. Everything ran smoothly, you have withdrawn your money and you are wondering how to spend it. Hold your horses a bit before rushing to spend all your money because you need to take into account your local taxes on gambling wins.
Unfortunately, it doesn’t really matter if you are a casual player or a seasoned gambler, how much time you spend gambling, or what amounts of cash. Gambling winnings are considered a source of income and they are taxed accordingly by many countries, at least by those where gambling is legal and regulated.
Is it Mandatory to Declare Your Gambling Wins?
The answer to this question depends a lot on the country you live in and the local laws. If your country states that all gambling winnings are taxable then it is indeed mandatory to declare your wins or you may risk fines according to your local laws.
If your country, on the other hand, doesn’t impose taxes on gambling activities, you may not need to declare your winnings if you are not gaining interest over them.
Gambling Taxes in Different Countries
Each country has its own set of laws when it comes to online gambling and the taxation of winnings. In many countries, players have to pay small taxes or none whatsoever while operators on the other hand must pay quite healthy taxes.
Of course, this applies only to countries where online gambling is clearly regulated and legal. In countries where gambling is either illegal or under a grey zone, we can’t really talk about taxes because most players gamble offshore through VPNs.
Below, you will find some of the biggest gambling markets in the world and their views towards gambling winnings taxation.
The United Kingdom
If you are a player living in the UK and playing in online casinos in the United Kingdom, you have plenty of reasons to celebrate because here you don’t have to pay any taxes on gambling wins.
When the UK Gambling Commission was established and the Gambling Act of 2005 came into being, the online gambling market fell into the right place in this country and actually brought a nice income to the government. The numbers are quite high, reaching £2.9-billion only in 2017/218.
A great portion of that huge number comes from the 15% tax applied to casino operators, a tax that’s also in place today. For players, however, things are a bit different because the government considers that the taxes are part of the odds so gamblers have absolutely no obligation.
In the process of legalizing online gambling, this country faced a huge threat from offshore casinos and the big local taxes. Many players preferred to gamble offshore to avoid these taxes and the local market was collapsing. That’s when the government scrapped the tax on gambling winnings and the local market started to flourish.
In the UK there is also no difference made between amateurs or casual players and professional players and none of them has to pay any taxes on their winnings.
There is however an exception to this rule for players that gamble at offshore casinos. Being licensed and regulated by another country's authority, players gambling here may have the obligation to pay gambling taxes according to that country’s laws.
The United States of America
In the USA, gambling may be casual fun to you but it’s taken very seriously by the government when it comes to federal income taxes. Every single dollar you win in this country is considered a taxable income.
First of all, all players have to declare their gambling wins and according to the amount they won things can get quite complicated. Overall, the state imposes a 24% tax on “substantial wins” which mean:
- $600 for horse racings
- $1200 or more for slot machines and bingo
- $1500 for keno
- $5000 for lotteries and poker tournaments
The only good part is that you are able to deduct your losses from this tax, however, excess losses will not be considered a tax write-off.
If gambling is actually a profession for you then gambling winnings are considered regular income and are taxed at a taxpayer's normal effective income tax rate.
Non-residents who gamble at USA online casinos have an even harder time because they are taxed in this jurisdiction with no less than 30% of their winnings’ value. The even worse part is the fact that nonresidents can’t deduct their losses from this tax.
Canada is a country with heavy taxes in a lot of fields, however, luckily for players, gambling is not one of them. In this country, gambling is not considered a stable source of income, and gambling winnings do not fall into employment, property, or other reliable categories.
Overall Canadian players do not have to pay any sort of taxes on their gambling winnings, however, there are some exceptions to this rule.
If you earn interest on your Canadian online casino winnings, these need to be legally declared or you will risk a fine. The second exception revolves around professional players who are required to file taxes. They are considered freelancers and activities as such are taxable in this country.
Australia is another tax-free country when it comes to gambling winnings. The government here sees money resulting from gambling as a result of good luck and not a source of stable income so there are no taxes imposed, not even for lotteries.
Only 2% of the national income of this country comes from Australia online casinos and that sum is covered by taxes imposed on operators. Professional players must also declare their wins and pay taxes because that’s considered a source of income.
For Kiwi gamblers, there is also some great news. There are no taxes imposed on gambling winnings whatsoever. Gambling in this country is considered to be a hobby and it’s tax-free. If you live in this country and play at NZD accepting casinos you won’t need to pay any sort of taxes on any gambling activities, including all forms of casino games, sports betting, or lotteries.
The entire legal framework in New Zealand is based on the Gambling Act of 2003. According to this act, as long as you gamble at a website that’s located offshore, there will be no taxes. No form of offshore online gambling income is taxable.
Casino operators on the other hand who wish to obtain a license in this jurisdiction can expect some quite big taxes.
The gambling market is still struggling, remaining illegal or under a grey zone in a lot of countries. Here, players avoid the local laws by using VPNs and playing at offshore casinos.
Since they are already using a loophole, it’s clear that we can’t really talk about any sort of taxes or declaring of any winnings because nobody will just go to the local authority and admit that they have illegally gambled offshore.
There are a couple of exceptions to this rule since some countries do impose taxes even on illegal gambling activities.
Luckily, in countries where gambling is legal, casual players don’t usually need to pay any sort of taxes. Professional players and casino operators on the other hand are taxed.
Since laws can vary so much from one country to another, it’s a good idea to do some digging on our all countries page and find out what’s the state of gambling in your country or region and if winnings are taxable or not there.
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