The question of who has to pay taxes on gambling has always been a hot topic in Australia and overseas. Regulations and laws vary significantly around the world, from country-to-country. Some of these laws can be confusing, especially when it comes to knowing which countries are player-friendly and which ones are making casino gaming illegal altogether.
It is no wonder that players struggle to understand how winnings are taxed at online casinos.
Do Australians Pay Gambling Taxes?
Aussies love gambling and have a rich history of punters placing wagers on horse racing as far back as the early 1800s.
Australian gambling is very player-friendly, with players not required to include any winnings from online casinos on their tax returns.
So although Aussie players do not pay taxes for online gambling, the Australian government does receive taxes from the casino operators directly. Casinos pay tax regardless of whether they run an online or brick-and-mortar setup.
If you are interested in online casino games, see the article we recently shared about casino games with the best odds.
Do I Still Have to Report Casino Winnings?
No, Australians do not have to report any casino winnings or player losses.
This is because the Australian Taxation Office considers that any player lucky enough to win is precisely that, lucky. The winnings are derived from luck and not from an income-generating activity, so they are not taxed.
What If I am a Professional Gambler?
Being a professional gambler would be awesome, but in theory, it is not possible in Australia.
While it is possible to increase your chances of winning so that you can make more money, it is much harder to convince the Aussie government that you are employed for tax purposes as a professional gambler.
The government is not too fond of classing people as professional gamblers because it would open the door for claiming any losses as a tax expense.
This also gives an insight into why casinos are taxed instead of players. The government generates much more revenue taxing these huge companies than they would taxing players.
Plus, it would be complicated to enforce the inclusion of gambling winnings in annual tax returns.
Gambling Income Taxes Around The World
As we mentioned, gambling taxes and legislation are different around the world. While the USA requires players to report their winnings (more on that shortly), other countries do not.
We’ve put together an overview of various tax-related circumstances for casinos and players, as well as noting countries that are player-friendly for taxation purposes.
What Countries Don’t Tax Players on Casino Winnings
Players of the following countries are not required to pay taxes on their winnings:
- Czech Republic
- United Kingdom
Countries with Alternative Casino Taxation Laws
There are three countries with alternative laws that come to mind when we think about the taxing of casino winnings; these are the United States, Kenya, and Ireland.
Casino Taxation in The United States
Although overall it feels like a bit of a grey area for USA players –because their legislation is different from state to state– winners do pay taxes in the US.
For the most part, any player who places bets in the United States is required to record and provide an itemised list of their casino wins and losses with their tax lodgement each year.
American players are taxed 25% on their casino winnings.
Casino Taxation in Kenya
For Kenyan players, the casino industry (particularly online gambling) has seen tremendous growth over the past six to seven years.
This growth, together with the alarming increase of children betting, forced the Kenya parliament to increase their tax rate on gambling activities to a staggering 35%.
Luckily, this tax over gambling revenue is paid by the bookies and operators, not the players.
While 35% may not seem like that much, it is quite a stone’s throw from the previous 7.5%. Plus, Kenyan casinos pay this rate on top of the standard 30% corporate tax.
Casino Taxation in Ireland
Gambling is becoming a massive revenue maker in Ireland, which is set to increase further with the strength of its economy being where it is at (growing six times faster than the average growth in Europe).
The luck of the Irish favors players here, as they are not required to pay tax on their winnings.
The bookies and operators pay gambling tax at a 2% tax rate on all bets that are placed through them (the rate was doubled from 1% in late 2018), and the betting duty on exchange revenues also increased to 20% (up from 15%). And while operators may cry foul, these taxes generate a lot of cash for an economy that has definitely turned the corner.