Are Online Casino Winnings Taxed? How to Be on Good Terms with Your Authorities
Gambling tax laws vary greatly from one location to the next. While it is completely banned in certain nations, other allow tax free earnings from gambling. The idea is that if it’s luck dependent, then it’s not really an income! Casinos, gaming, and betting businesses are sometimes required by law to pay taxes on their earnings. Individuals may be required to pay tax on their winnings in specific situations. Other times, the taxes are quite high, and other times, they are extremely low, making these areas a sanctuary for gamblers and casino owners.
Are Casino Winnings Taxed?
While the regulations vary by nation, you are more likely to be taxed if gambling is your career or your primary source of income. This implies you won't be taxed if you gambled and won, but you have a more substantial source of income and don't rely on gambling to make a livelihood. But that is not the case with all sports betting and online casino winnings tax.
In some countries, there is no online casino winnings tax at all, while in others, players are not taxed on winnings but casino operators and bookmakers are. Countries such as Austria, Australia, Belgium, Bulgaria, Canada, Czech Republic, Denmark, Finland, Germany, Hungary, Italy, Luxembourg, Malta, Romania, Sweden, and the United Kingdom have no regulations for sports and casino winning taxes.
Which Kind of Winnings Are Considered Taxable and Which Are Not?
Depending on where you are, you may be subjected to winning tax. In the US, for example, winning from betting are considered income, and should be reported on for tax purposes just the same. Gambling income includes but isn’t limited to winnings from lotteries, raffles, horse races, sports betting and casinos. In the US for example, if you make $600 or more gambling on sports, you must pay federal taxes on it, according to the IRS. This covers non-cash prizes with a monetary value as well, such a plane tickets, cars, etc.
According to the IRS website, “fair market value of prizes, such as cars and trips,” must be recorded as income before the amount of taxes can be calculated.
As another example deviating from what seems to be the case in the US, in the UK, as a player you don’t pay online casino winning taxes, but operators may have to. Casinos in the United Kingdom are taxed dependent on how much money they make. Profits from games like poker, roulette, and blackjack can be taxed anywhere from 15% to 50%, while land-based slots are taxed anywhere from 5% to 25%. Once again, while they will be on the hook to pay up for the profit they make, you may have to pay on your winnings depending on your location.
Can I Deduct Losses from My Taxes?
Make sure to check your local regulations regarding legality of gambling and taxation if you are not in one of the gambling-tax-free countries mentioned above.
Even if you are from one of the nations mentioned but are playing gamble overseas, you may be required to pay, according to their tax laws, on both sports and online casino winning taxes.
If located in the US, fortunately, while you must report all of your wins on your tax return, you are not required to pay tax on the entire amount. On your tax form, you can claim your yearly gambling losses as an itemized deduction. You won't have to pay any casino winning taxes on your gains if you lost as much as you won over the year.
Final Thoughts!
While I always encourage gamblers to read up about online casino safety, safely depositing and withdrawing, safety doesn’t end there. In the end, if you are not living in the United Kingdom, Europe, Oceania, or Canada, you possibly have to pay taxes on your online gambling profits. In the United States, you must report any gambling gains on your annual tax return.
Once again, knowing the laws and regulations of gambling where you are located is very important since the rules vary from one country to another. Always make sure that you are following the appropriate laws so at the end of the year, you won’t get into any trouble. You can always read my Beginner’s Guide to Gamble for more tips on gambling safely.
About The Author: John Duncan is a web operation executive at CannonBet. Born and raised in the cybersecurity world. He authors guides on cybersecurity and safety and loves sharing the best practices. You can contact the author via email.