The Short Answer

For most people, no. Canada does not usually tax gambling winnings. If you win at an online casino, a lottery or a sportsbook as a hobby, you normally keep the lot.

That makes Canada quite different from the United States. There, gambling wins count as income. In Canada, the Canada Revenue Agency (CRA) treats a casual win as a windfall rather than income.

However, there are exceptions. Professional gamblers can be taxed, and money you earn from your winnings is taxed too. This guide explains where the lines fall.

Why Most Winnings Are Tax Free

Canadian tax law taxes income from a source, such as a job or a business. A lucky win isn’t seen as coming from a source like that. Instead, it is treated as a windfall, much like a gift or an inheritance.

As a result, you don’t report casual gambling winnings on your tax return. That applies whether you win $50 on a slot or $50,000 on a jackpot.

The same rule covers most types of gambling:

There is one catch for casual players. Because winnings aren’t income, losses aren’t deductible either. You can’t use a bad year at the casino to cut your tax bill.

When Gambling Winnings Are Taxed

The big exception is professional gambling. If gambling is effectively your business, the CRA can treat your winnings as business income. In that case, you report them, and you pay tax on your profits.

There is no fixed dollar amount that makes you a professional. Instead, the CRA looks at how you go about it. Tax experts point to a few main factors:

• Time. How much of your time goes into gambling?
• Approach. Do you run it like a business, with records, a bankroll and a strategy?
• Skill and knowledge. Do you rely on skill rather than luck?
• Intent. Is making a living from gambling the goal?

Games of skill, such as poker, are where this usually comes up. Pure games of chance, such as slots and roulette, are much harder to treat as a business. That is because no amount of skill gives you an edge.

What the courts have said

Several high-stakes poker players have challenged tax bills in court. They argued their winnings should be treated like lottery wins. The courts disagreed, and the Supreme Court of Canada declined to hear the case. So for full-time, skilled players, the law is now fairly clear.

Professionals can deduct losses

Being taxed as a professional has one upside. If your gambling is a business, you can deduct losses and business costs against your winnings. Examples include tournament entry fees and some travel costs.

Interest on Your Winnings Is Taxed

This is the part many winners miss. The win itself is tax free. However, anything that money earns after you win it is taxable like any other savings.

Say you win $100,000 and put it in a savings account. The $100,000 isn’t taxed. The interest it earns each year is, and you report it on your return in the usual way.

Investment growth, dividends and rental income bought with your winnings are taxed in the same way. Tax-free accounts such as a TFSA can help here, within the normal contribution limits.

Winning in the United States

Things change if you win in the US. American casinos usually hold back 30% of large wins from Canadian visitors. That money goes to the US tax authorities.

The good news is that you may be able to get some of it back. Under the tax treaty between Canada and the US, Canadians can often offset US gambling losses against US winnings. To do that, you file a US tax return and keep careful records of both.

This can be complicated, so many people use a tax adviser who knows US returns. Either way, keep your win and loss records from any US trip.

Online Casino Winnings

The rules are the same online. Winnings from a licensed Ontario or Alberta casino are treated like any other casual win. The same goes for provincial sites and for offshore casinos that accept Canadians.

Withdrawals to your bank account won’t trigger a tax bill on their own. However, large or frequent deposits can catch your bank’s attention. Keeping casino statements makes any questions easy to answer.

Need somewhere to play? Our Canadian online casinos guide lists casinos that accept Canadian players and CAD.

Common Myths About Gambling Tax

A lot of half-truths float around about tax and gambling. Here are the ones we hear most.

Bonus and free spin winnings

Casino bonuses and free spins don’t change the picture. If you win from a bonus while playing for fun, the win is a casual windfall like any other.

Do bear in mind that bonus winnings usually come with wagering rules. That affects when you can withdraw, not whether you pay tax.

Giving Winnings to Family

Canada has no gift tax. So if you share a win with your family, neither of you pays tax on the gift itself.

However, watch out for one rule. If you give money to your spouse or a child under 18, income it earns may be taxed as yours. These are called attribution rules, and an accountant can explain how they apply to you.

Crypto Casino Winnings

Some offshore casinos pay out in Bitcoin or other coins. The win itself follows the normal windfall rule. However, crypto prices move after you cash out.

If your coins rise in value and you later sell them, the gain may be taxable. In that case, it is the price change that is taxed, not the original win. Keep a record of the value on the day you received the coins.

Keep Good Records

Even if your winnings are tax free, records are worth keeping. They help if your bank or the CRA ever asks where a large deposit came from.

• Download casino transaction histories now and then.
• Keep emails or screenshots of big wins.
• Keep receipts for lottery prizes and large casino payouts.
• Note dates, amounts and where you played.

If you play a lot, or mainly play poker, records matter even more. They show how you approach gambling, which is what the CRA looks at.

Provincial Differences

Income tax rules for gambling come from federal law, so they are the same across the country. Whether you live in British Columbia, Quebec or Nova Scotia, casual wins are treated the same way.

What does change by province is where you can play and the minimum age. Our guide to the gambling age in Canada covers the age in each province.

When to Get Advice

Most casual players never need to think about tax. However, it is worth speaking to an accountant if any of these apply:

• You make a large part of your living from gambling.
• You play poker or bet on sports seriously and regularly.
• A big prize came from a US casino.
• You plan to invest a large win.

We are not tax advisers, and this guide is general information. A qualified accountant can look at your own situation.

Frequently Asked Questions

Do I have to pay tax on casino winnings in Canada?

Usually not. Casual casino winnings are treated as a windfall rather than income, so they are not taxed.

Are lottery winnings taxed in Canada?

No. Lottery prizes are tax free. However, any interest or investment income you earn from the prize is taxable.

Are online sports betting winnings taxable?

Not for casual bettors. They are treated the same as other gambling wins.

Can I deduct gambling losses in Canada?

Only if you gamble as a business. Casual players can’t deduct losses, because their winnings aren’t taxed either.

What happens if I win in a US casino?

The casino may hold back 30% for US tax. You may be able to recover some of it by filing a US tax return under the Canada-US tax treaty.

Do I need to report a big casino win?

Casual winnings don’t go on your tax return. However, keep records, and report any interest the money earns afterwards.