Have you ever wondered if you are supposed to pay taxes on your gambling winnings? Don’t worry, we’ve got your back! Before gambling in your jurisdiction, you might want to know if you can cash out your winnings without paying taxes or not. And as always, we’re here to help.
In this article, Casino Captain will share all the knowledge we have about tax on the gambling worldwide. Whether you are a recreational player or a professional gambler, this is what you need to know:
Table of Contents
Gambling Tax in the United Kingdom
You are one double lucky winner if you just won much while gambling in the United Kingdom. We say that because casino winnings, as well as lottery and sports betting winnings, are tax-free for all gamblers in Scotland, Wales, Ireland and England since 2001.
This goes for both offline and online gambling. As a player, you don’t need to worry if you win your money on an offshore online casino site neither, as a resident in the U.K you won’t be eligible to pay tax. Sometimes, if you play outside of the U.K, local taxes might be applicable. However, a non-resident may often be able to request a refund and get the money back for taxes like that.
If you are planning to pursue professional gambling U.K is the place to be. HM Revenue & Customs doesn’t make any difference when it comes to recreational and professional gamblers however much money you play for or win.
Even though you as a gambler needn’t worry about taxation on your casino winnings, the operators face a different reality. Any gambling business (for example an online casino) in the UK are taxed 15% on their GGR (Gaming Gross Profits). Remember however to play on online casinos that are licensed by the UKGC!
Gambling Tax in Canada
Good news for all Canadians! If you reside in Canada you are just almost as lucky as the British. Living in Canada means that you won’t be charged any income tax on your gambling winnings. This holds true for all lottery winnings!
When it comes to gambling winnings, they might be subject to tax in Canada, but only if you are a professional player.
In general gambling winnings aren’t taxable (online and offline). This is due to the CRA (Canada Revenue Agency) not considering gambling to be a steady source of income, which according to the Income Tax Act means you shouldn’t have to pay taxes for them.
So to tax players on any winning, the Canada Revenue Agency /CRA will have to decide whether someone is a professional gambler or not. This is not decided by how big wins players do, or even from how much money spent on betting.
According to the Canada Revenue Agency, a professional gambler is an individual who makes the majority of their incomes from gambling (this does not apply to lottery winnings). If this holds true to you, you should declare your win on your income tax return. How much tax you should pay will be determined by your total amount of incomes by the end of the year.
Generally, most casino players do not need to worry about their winnings being taxable. This also means that such a player won’t be allowed to deduct gambling losses.
Gambling Tax in New Zealand
According to statistics up to 40% of New Zealanders gamble on a regular basis. And in 2019, $18 billion NZD was wagered gambling. With that in mind, it’s great to know that gambling winnings, whether it is from online gambling or physical operators, is tax-free. With that being said, the gambling activities could be taxable if they were to be considered as the main source of income.
This is how its works: According to the New Zealand law players are allowed to gamble both on casinos in the country and online. The casinos, poker and gamblings sites are however not allowed to advertise their business.
Gambling in any establishment is considered recreational gambling, but if the player is using gambling as his main income source, and the player has small or no other sources of income, winnings could be taxed according to the Income Tax Act.
Casino players are rarely forced to pay tax on their winnings. In general, the income tax is applied mainly to winnings made by professional poker players.
Gambling Taxes in Australia
According to the ATO (Australian Taxation Office) winnings from casino games or gambling, in general, is not considered to be a steady source of income. The ATO consider such winnings as a result of good luck. For winners, such as yourself, that means that you don’t have any obligation to pay tax for winnings from offline or online gambling. All the money you won is all yours!
However, rules are different for professional gamblers. To be considered a professional gambler, you would need to have business connections in the gambling industry. If you feel unsure whether you could be considered to be gambling professionally, we recommend you to contact the ATO.
Since money winnings from casino games aren’t considered income, the same rule goes the other way around. That means that there aren’t any deductions to claim for gambling-related losses. Of course, this doesn’t apply if you own some gambling business. In that case, there might be certain deductions, such as Capital Gains Tax.
Gambling Taxes in United States of America
Although the USA has lower income tax than many other countries around the world, this does not hold true for gambling. Any sports betting, poker, lottery and casino winnings, whether professional or not, means you will be paying taxes to the IRS.
The federal tax in the USA on earnings from casino games, poker, sports betting, poker, lotteries or similar activities will be added to your income. The total amount of incomes, together with federal tax brackets, will decide how much tax you’ll be paying.
When winning on online casinos, sports or lotteries, it is common that the operator withholds 25% for tax purposes. If you do not provide them with your SSN, they may withhold up to 28% at this point.
As an addition to the federal taxes that you’ll definitely have to pay, your winnings will in some cases also be taxable in the state you won, and even in the state, you reside in.
Some states, like Alabama, Florida and California won’t make gamblers pay taxes, except for the federal tax. But if you live in a state like New York, that requires you to file your winnings as incomes, you’ll need to do so.
If both the state you won in, and the state you reside in require you to pay taxes, you may be able to claim the money back from the state you reside in.
The following states do not charge an individual income tax for any gambling win:
- Alabama 0.00%
- Alaska 0.00%
- California 0.00%
- Delaware 0.00%
- Florida 0.00%
- Hawaii 0.00%
- Mississippi 0.00%
- Nevada 0.00%
- New Hampshire 0.00%
- South Dakota 0.00%
- Tennessee 0.00%
- Texas 0.00%
- Utah 0.00%
- Washington 0.00%
- Wyoming 0.00%
If you win or reside in any of the following states you may need to pay taxes in addition to the federal tax:
|State in The US||Additional Tax on Gambling Winnings|
In some states, you might be able to deduct gambling losses up to the number of declared winnings. That means, if you have won $10.000, you can claim gambling losses up to that amount but not more. This does not hold for all states, and the rules are often rewritten, so make sure to check what deductions you can do when you file your income tax return.
Gambling Tax in India
Indian players are not as lucky as Canadian and most of the other nationalities mentioned above. Whether it comes to casino winnings, lottery winnings, winnings from sports betting, from online casinos or physical ones, Indian residents need to pay tax on their winnings.
The rules for gambling taxes fall under the Income Tax Act and includes any kind of win from betting, gambling, lottery, card games and other games that consists of ₹10.000 or more.
In India the law doesn’t distinguish between professional gamblers or recreational players. Neither does the law distinguish between winnings form offline and online gambling.
In a physical casino, taxes on winnings should be dealt with straight by the operator. However, on an online casino, this is rarely the case. That means that if you are winning ₹10.000 or more, you will need to make sure that taxes are paid. You can read more on taxes and gambling regulations in India here.
Countries With the Lowest Tax on Gambling
A casino operator in countries like Russia and Italy won’t need to worry about paying taxes on any kind of casino games, online casinos, poker etc. In Cambodia, the percentage is as low as 2.5%.
Also, several countries where a player who plays on a casino won’t be paying any tax. Instead, the gambling operator, (online casinos etc.) will be paying taxes on their revenue. This means that you can be sure that any win in these countries is tax-free and yours in full.
These countries include:
- Czech Republic
Countries with the Highest Tax on gambling
Gamblers that hit a big win in, for example, Germany won’t be affected by the crazy high tax rate for casino games. However, casinos in Germany and many other countries are charged taxes on their GGR (Gross Gaming Revenue).
In Germany, this percentage is as high as 80%. Other countries that charge high rates for gambling business include France, Luxembourg, Denmark, Australia, UK, Austria, Macau, USA, Greece and the Czech Republic. Did we not cover your country? Contact us and we’ll help.
Last updated December 23rd, 2020