Online Gambling Tax FAQs

Online Gambling Tax FAQs

Benjamin Franklin, a founding father of the United States, once said: "In this world nothing can be said to be certain, except death and taxes." These wise words hold true even in the world of online gambling, so be sure to check out this guide outlining all there is to know about online gambling taxes around the world!

Do You Have to Pay Taxes on Online Gambling Winnings?

It all depends on your location, really. For punters in the UK, parts of Europe, Oceania and Canada the answer is no, you don’t have to pay taxes on online gambling winnings. However, some countries do require gambling winnings to be declared as part of tax payments, with the USA being the most notable example. The key point is that each jurisdiction has its own set of regulations regarding gambling taxation.

Do You Have to Pay Taxes on Online Gambling Winnings in the UK?

No! The good news for gamblers in the UK is that they are exempt from paying any tax on their winnings. Since back in 2001, betting duty has been abolished on UK shores, which means that winnings earned from sports betting, online casinos, poker games, bingo or lotteries are exempt from taxation.

Do You Have to Pay Taxes on Online Gambling Winnings in Ireland?

The same rules apply in the Republic of Ireland as the UK, where gambling winnings are considered neither income nor capital gain but rather the 'receipt of luck'.

Do You Have to Pay Taxes on Online Gambling Winnings in Canada?

With the income tax landscape being rather different in Canada, the main point to note is that gambling winnings are not considered taxable income. While no legal framework has been put into place surrounding gambling activity, some winnings are considered ‘prizes’ under the Income Tax Act. But the key takeaway is that, for now at least, gambling winnings are not taxed in Canada.

Do You Have to Pay Taxes on Online Gambling Winnings in Australia or New Zealand?

Both Australian and Kiwi natives are exempt from paying tax on gambling winnings, as betting is considered a hobby or recreational activity rather than a profession. Even professional gamblers in Oceania can use this loophole to their advantage!

Do You Have to Pay Taxes on Online Gambling Winnings in the Rest of the World?

The table below explores the taxation in various countries across the globe:

CountryTaxation
AustriaNone
BelgiumNone
BulgariaNone
Czech RepublicNone
DenmarkNone
FinlandNone
France2% on poker wins, 7.5% on sports / horse racing
GermanyNone
Greece10% on lottery wins
ItalyNone
KenyaNone
Lativa25%
Holland29% on lottery wins over €454
Nigeria20% on all
Portugalup to 35% on lottery wins
RomaniaNone
Slovenia50% on lottery wins of more than €4000
SwedenNone
South Africa6% on horse racing

As you can see from the table above, there’s really no hard and fast rule regarding gambling tax. Some European countries are tax-free, others are quite stringent, so it is worth doing your research if you live in a country not listed above.

What Countries Have No Online Gambling Taxes?

  • UK
  • Canada
  • Germany
  • Austria
  • Belgium
  • Bulgaria
  • Australia
  • Denmark
  • Italy
  • Sweden
  • Malta

The list above is by no means exhaustive, but this is a selection of some of the countries where gambling winnings are not taxed. Other countries, such as India, have different laws across their various states.

Do Professional Gamblers Have to Pay Online Gambling Taxes?

The same rule applies to professional gamblers as to those who place a £1 bet on the horses on a Saturday: gambling winnings are exempt from taxation in the UK regardless of the volume of wagers placed. It’s worth noting that a tax refund on losses can’t be sought by those who are self-assessed.

For countries outside of the UK, professional gamblers will be subject to the tax laws of that particular jurisdiction. UK poker players who head to Las Vegas to play are still subject to the gambling laws in their home country, although 30% of their winnings can be withheld unless a W2-G form is completed.

Do Online Gambling Sites Have to Pay Taxes?

Yes, since the introduction of the Point of Consumption Tax, online gambling sites – no matter where they are based – are obliged to pay 15% on all wagers accepted from UK players.

Are Online Gambling Taxes the Same for Casino, Poker and Bingo?

Any activity considered to be a form of gambling under the jurisdictions' legal framework is subject to the same level of taxation, whether that’s casino gaming and sports betting or bingo and poker.

Do I Need to Declare My Online Gambling Winnings?

No, since betting duty was abolished in 2001 there has been no requirement to declare winnings to HMRC in the UK. In the US gambling winnings must be declared under the terms of the US Tax Code, and other countries have similar rules.

Can I Give or Gift My Online Gambling Winnings Away?

Gambling winnings are subject to inheritance tax if you should pass away within seven years of the gifting. Gifts of no more than £250 can be freely given.

History of Online Gambling Taxes in the UK

During the 2000s, when the prevailing trend was for many online gambling sites and bookmakers to take their operations overseas to tax havens, the then Prime Minister Gordon Brown changed the law to ensure that these operators were still subject to taxation.

So, in 2001, the regulation requiring bettors to pay tax on their winnings was abolished. Now a 15% tax was levied on the gross profits of bookmakers and gambling platforms that operated within the UK (but were not necessarily based here). The revisions of the Gambling Act (2005) also featured ramifications for online gambling for the first time.

What is the UK’s Gambling (Licensing and Advertising) Act 2014?

The 2014 amendments to the UK Gambling Act made it a legal requirement that all operators operating domestically – no matter where they were based – had to obtain a specific UK Gambling Licence, rather than being licensed by a separate jurisdiction.

What is the UK Point of Consumption Tax?

This Act is a change in the taxation law based on geography. Since 2014, the prior 'point of purchase' law was amended and replaced by that of the 'point of consumption', meaning that gambling providers outside of the UK would still be subject to the 15% tax levy on wagers placed by UK punters.

What are Betting Duties?

To remain legally compliant, a gambling operator must pay betting duties to HMRC based on the nature of their business. The three types are General Betting Duty (GBD), Pool Betting Duty (PBD) and Remote Gaming Duty (RGD). This Duty must be paid if bets are accepted from UK customers in sports betting/gaming in the UK, high street bookmakers and spread betting conducted on these shores.

Will Brexit Have an Effect on Online Gambling Taxes?

Unfortunately, the economic effects of Brexit on a number of industries remains unclear, although the general consensus is that online gambling will, to some extent, be less harshly affected than most. The reasons for this are twofold: firstly, gambling of all types is largely ‘recession-proof’, with industry numbers remaining high almost regardless of the economic state of play.

Secondly, since the introduction of the Point of Consumption Act, many of the UK’s largest gambling entities are based in Europe or beyond; so income from taxation will remain more-or-less the same. The one question mark is regarding Gibraltar’s position as a UK territory. This is a base for many gambling operators, and so employment levels could be greatly impacted.

What Are the Taxation Rules Regarding Spread Betting?

Spread betting is not regulated by the UK Gambling Commission, and so instead comes under the remit of the Financial Conduct Authority (FCA). However, there’s still no legal requirement to pay tax on any such winnings. Some spread bettors or traders classify their betting activities as their main source of income, and so they will be liable to pay tax on their 'salary'.

Will the Gambling Tax Situation in the US Change Now that Donald Trump is President?

It actually could well do. Trump is on record declaring his advocacy of online gambling, and it may well be the case that during his time in office that the betting landscape changes significantly in the country. This is a man with his own chain of casinos, after all, and as a noted businessman the opportunity to boost his country’s economy will no doubt appeal.

Any changes, should they occur, will take time, with motions having to be passed through the courts, but if Trump has his way it might just become a reality that anyone in America can place their bets as and when they please. Speaking to Forbes Magazine in an interview just prior to his election, Trump explained his views:

"It [online gambling] has to happen because many other countries are doing it and like usual the US is just missing out."

The tax landscape is unlikely to change hugely, however, with gamblers still having to pay tax on their winnings. But should betting become legalized then the percentage paid may just decrease.

Why do Many Online Gambling Sites Base Themselves in Gibraltar?

The answer, as is often the case in business, is monetary. In Gibraltar, taxes are levied at a mere 1%, and – best of all – capped at just £425,000. So until the Point of Consumption Tax came into being, many online operators were paying far less in tax than they should have been.

But with the UK market still dominating online gambling, the Point of Consumption Tax levels the playing field for those based in 'tax havens' and those who have decided to keep their operations on British shores.

2002: The Year the Betting Industry Changed Forever

UK gamblers can thank one Gordon Brown for them no longer having to pay tax on their winnings. It was he who kick-started the campaign for regulatory change governing the gambling industry, with bigger casinos and relaxed advertising laws just two of his initiatives.

The third was to scrap betting tax for customers, and it was this that really struck a chord with decision-makers. In 2002 Brown made his idea a policy, and so what ultimately was a tax on gamblers – a 6.75% tax on bookmakers translated to a 9% tax on punters – was abolished. This was the first time in four decades that a gambler could trouser 100% of their payout.

The Gambling Act 2005: Getting Web-Savvy

In the mid-2000s the technological revolution was in full force, with faster internet speeds, more reliable laptops/PCs available at affordable prices and a greater sense of 'tech savvy' driving an uptake in the latest innovations. One such innovation was online gambling and, before the industry became a free-for-all, the government decided to step in and tighten up the regulatory framework.

With the advent of the UK Gambling Act (2005), online gambling operators became more stringently monitored, and had to apply for a license from the UK Gambling Commission before they could offer their services to UK-based players. The key was that lawmakers didn’t perform a U-turn on taxation, as feared, so players were free to bet without fear of a portion of their winnings being taken from them.

Has the Point of Consumption Tax Affected the Gambling Industry?

Paying no tax is good news for punters, but what about the operators that provide them with a platform to bet? Estimates of how much the POC would cost betting sites varied wildly, although William Hill noted that their operating profit fell by around £20 million in the first half of the year following the introduction of the new legislation, with a tax bill in excess of £40 million greater than the same 12 months previously.

Other changes in the industry have been strategic. A culture of mergers has arisen as firms attempt to minimize the damage caused by lost revenue, with the likes of Ladbrokes and Gala Coral joining forces and Paddy Power and Betfair teaming up to create a sports betting behemoth. Overall, revenues continue to rise in the UK for sports betting platforms, which suggest that any losses caused by the Point of Consumption Tax will, in the long term at least, be negated.

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