This question worries many players who visit land-based gambling establishments or play casino games on the Internet regularly. In this article, we will analyze it and explain whether you need to pay taxes on your winnings.


Content:
Which Group of Canadian Gamblers Do You Belong to?
When Will the Canadian Government Tax Your Winnings?
When Do You Become a Professional Gambler Under Canadian Law?
Can Players Tax Their Expenses?
Which Group of Canadian Gamblers Do You Belong to?
The Canadian government assigns a recreational status to most gamblers. In other words, if you play video poker from time to time, bet on your favourite hockey team or buy lottery tickets on your way home after work, you are a recreational gambler. In this case, your success in generating winnings is irrelevant since you do not rely on this money as your main source of income. Therefore, recreational gamblers do not have to worry about taxes on their won funds.

But what if your gambling hobby brings you a steady income? In this case, the legislation perceives you as a professional gambler who must share part of his/her winnings with the government through taxes. For example, the well-known live poker player and multiple World Series of Poker winner, Gavin Smith, has earned about $5 million in his gambling career and transferred a significant portion of this funds to the Canadian government as taxes. He devotes a lot of time to his poker obsession and makes a regular profit. Therefore, he is a professional gambler.

A significant aspect is that the government does not assign this status to those who are lucky enough to win a massive cash prize on several occasions. Time plays an extremely vital role in this regard, and you should actually treat your lucrative hobby as a full-time job to become a professional gambler and tax your winnings.

The following table will help you determine your professional gambling tax responsibilities.

Type of gambling

Tax status

Sports Betting

Requires taxation

Horse racing

Requires taxation

eSports

Requires taxation

Scratch & Win

Does not require taxation

Poker

Requires taxation

Lottery

Does not require taxation

Land-Based Casino

Requires taxation

Fantasy sports

Requires taxation

Raffles

Does not require taxation

Bingo

Requires taxation

Online Casino

Requires taxation

Pools/Pari-Mutuel

Requires taxation

Pull-Tabs

Does not require taxation

As for recreational gamblers, they do not have to worry about taxation at all, since each of the mentioned above forms of gambling is tax-free.

When Will the Canadian Government Tax Your Winnings?
Everyone who has received massive winnings at least once in his/her life thought whether it was necessary to pay taxes for this money. If your sports betting, lottery tickets or regular gambling sessions at online casinos give you a solid boost to your salary, you can use that money entirely without any taxation. According to the law, such a gambling experience is a recreational one.

On the other hand, professional players face completely different requirements. If they do not declare their gambling income, Canada Revenue Agency can punish them with a solid fine. The good news is that the Canadian government not only taxes your winnings but also compensates you for certain expenses. It will perceive your gambling hobby as a private business if you fill out and submit tax documents on time.

Bear in mind that the mentioned above rules work on Canadian territory only. And once you cross the border, you will have to comply with the recreational and professional gambling laws of the country you decide to visit. For example, American law subjects foreign gamblers to a 30% tax rate. It means that if you are lucky enough to win over 1200 US dollars in a land-based gambling establishment, you can only get $900.

Of course, if you won several tens or even hundreds of thousands of dollars at a casino, you should use a special tax refund program for such cases. But keep in mind that this bureaucratic procedure will undoubtedly take a lot of your time as you will have to receive several vital documents.

When Do You Become a Professional Gambler Under Canadian Law?
Since a professional gambler is an extremely rare job, you will not find clear criteria for it in the Canadian Income Tax Act. The Revenue Agency will begin reviewing your case after making sure that you have been really making a living out of your gambling hobby for several years. And if you try to convince the regulator that you are a professional gambler to get compensation for some of your expenses, you will have to provide it with strong evidence.

Can Players Tax Their Expenses?
Recreational gambling does not allow you to cover your expenses through taxation. Given that the Revenue Agency does not tax recreational players on their winnings no matter how much they win, it makes sense. On the other hand, the regulatory jurisdiction considers professional gamblers to be businessmen and allows them to write off certain payments. For example, if such a gambler has to fly to different cities to participate in poker tournaments, he/she can return the money spent on tickets purchasing.