26. Taxes on Winnings: What Online Players Need to Know

Quick answer:

United States: Yes. You must report all gambling winnings. See IRS Topic No. 419.
United Kingdom: Players do not pay tax on gambling winnings. Operators pay duties. See HMRC guidance.
Canada: Casual players usually do not pay tax. If it looks like a business, it can be taxable. See CRA’s archived bulletin IT‑334R2.
Australia: Casual gambling wins are usually not taxed. See ATO guidance.
EU: Rules vary by country. Many tax the operator, not the player. See the European Commission note on online gambling in the EU.

Important: This article gives general info only. It is not tax or legal advice. Rules can change. Your case can be different. Please talk to a qualified tax pro in your country.

Are gambling winnings taxable? Fast overview by country
What counts as “winnings,” and when do you report?
United States rules in detail
Quick snapshots beyond the US
Online-only points: bonuses, crypto, records
How to stay compliant: a simple system
Common mistakes that cost players money
FAQs
Bottom line and resources

Are gambling winnings taxable? Fast overview by country

Tax rules depend on where you live and where the win comes from. Here is the short version:

United States: All gambling winnings are taxable. You must report them on your tax return. You may get Form W‑2G for big wins, but you must report all wins even if you do not get a form. See IRS Topic No. 419 and Publication 525.
United Kingdom: Players do not pay income tax on gambling wins. HMRC taxes the operator instead. See HMRC: Gambling duties and HMRC manual note on Gambling and lotteries.
Canada: Casual wins are usually not taxed. If your play is organized, steady, and for profit (like a business), it can be income. See CRA’s IT‑334R2.
Australia: Casual gambling wins are generally not taxed. If your gambling is part of a wider business, rules can change. See ATO: Prizes and awards.
EU: Mixed. Many countries tax the operator, not the player. Some have special rules for certain games or for play on unlicensed sites. Check your local tax office site. The EU overview is here: European Commission: Online gambling.

What counts as “winnings,” and when do you report?

“Winnings” means money or value you get from chance or betting. It can be:

Casino games: slots, roulette, blackjack, etc.
Poker cash games and tournaments
Sports bets and parlays
Horse racing and other pari‑mutuel bets
Lotteries, raffles, bingo, keno
Game shows and prize contests

Bonuses and comps: Free bets, free spins, and cashback can lead to cashable wins. In places that tax wins (like the US), your net gain is taxable. “Comps” (like a prize TV or a trip) may be taxable at fair market value (what it would cost in a store).

Crypto: If you bet with crypto, there can be two tax layers in some countries (like the US):

The gambling result (win or loss)
A crypto “disposal” if the coin changed value since you got it (a capital gain or loss). See the IRS virtual currency FAQ: IRS crypto FAQs.

When do you report? In general, you report the income when you can use it. If the site credits your account and you can withdraw, that counts as income in that tax year.

United States rules in detail

Here we go step by step. Keep it simple. Keep good records.

Reporting basics

You must report all gambling winnings on Form 1040. The line is on Schedule 1 (Other income). See About Schedule 1 (Form 1040).
You may get a Form W‑2G for certain wins. But you must report all wins even if you do not get a W‑2G. See About Form W‑2G.
Gambling losses can reduce your tax, but only in a special way. If you itemize, you can deduct losses up to the amount of your wins. You cannot deduct more than you won. See Publication 529 and Schedule A.

W‑2G thresholds and withholding

These are common cases where a W‑2G may be issued:

Slots and bingo: $1,200 or more (gross win)
Keno: $1,500 or more (net of the wager)
Poker tournaments: $5,000 or more (net of the buy‑in)
Horse racing and some sports/lottery bets: W‑2G when the win is $600 or more and is at least 300 times the bet

In some cases, the operator must hold back tax (federal withholding). The rate is usually 24% if withholding applies. If you did not give a correct TIN, “backup withholding” can apply. See W‑2G instructions: IRS Instructions for Forms W‑2G.

State taxes

Many states tax gambling wins too. A few states have no personal income tax. But city or local tax may still apply. Check your state tax website for the current rule.

Losses and how to deduct them

Recreational players: If you itemize, you can deduct gambling losses up to your total gambling wins. You need records. A casino “win/loss statement” can help, but keep your own log too. See Topic No. 419.
Professional gamblers: Some players file as a business (Schedule C). This is complex and depends on your facts. After the 2017 law changes, total gambling deductions cannot exceed gambling income even for pros. Speak to a CPA for this case.

Online play and offshore sites

If you are a US taxpayer, you must report your worldwide gambling wins, even from offshore sites. This is true even if the site does not send you a W‑2G.
E‑wallet moves by themselves are not income. Income is the win. For crypto, there can be gain/loss on the coin you use or receive. See IRS crypto FAQs.

Nonresident players and cross‑border wins

Non‑US players with US‑source gambling income may face 30% withholding. Treaty rules can change this. See IRS Publication 515 and About Form 1042‑S.

Simple examples

Example 1 (recreational): You won $5,000 total this year. You also lost $3,200. You report $5,000 as income on Schedule 1. If you itemize, you can deduct up to $3,200 of losses on Schedule A. Your net effect is $1,800 of taxable wins.

Example 2 (withholding): You hit a $6,000 sports parlay. The book withholds 24% ($1,440). You still report the $6,000 win. The $1,440 is a credit on your tax return. You may get money back or owe more after all your income and deductions are counted.

Quick snapshots beyond the US

United Kingdom

Good news: players do not pay tax on gambling wins.
HMRC taxes operators through duties. See HMRC: Gambling duties.
Still, keep basic records for your own budget. If you earn money from streaming, tips, or coaching, that income can be taxable.

Canada

Most casual play is not taxed.
If your play is organized, steady, and profit‑driven (like a business), your wins can be taxable. This is a case‑by‑case test.
CRA has old but useful guidance on windfalls and prizes. See IT‑334R2: Miscellaneous Receipts.

Australia

Casual gambling wins are usually not taxed.
If gambling is part of a wider business, talk to a tax pro. See ATO: Prizes and awards and “Business or hobby?” at the ATO: ATO: Business or hobby?

European Union note

There is no single EU tax rule for players.
Many countries tax the operator. Some have tax on player wins in special cases.
Check your finance ministry or tax office site. For a general view, see the EU page on online gambling.

Online-only points: bonuses, crypto, records

Bonuses and promos

Free bets and free spins feel like “free.” But if you turn them into cash, the net win can be taxable in places like the US.
Cashback is often like a discount. But if it raises your net win, it still counts toward income where wins are taxed.

Crypto gambling

Track the coin price at deposit, at the bet, and at withdrawal. You may have a capital gain or loss on the coin, plus a gambling win or loss.
Keep screenshots and wallet IDs. This makes tax time easy. See IRS crypto FAQs.

Get clean documents

Choose licensed sites that offer clear win/loss statements, fast support, and safe payouts.
Many top review sites flag this. For example, Casino-Game.co.za highlights licensed casinos and sportsbooks and notes if they provide good account statements. This helps when you need proof for taxes or for your own budget.

How to stay compliant: a simple system

Here is a small system you can use. It takes 5 minutes per session.

Use one wallet or account for gambling. Do not mix with daily bills. This makes tracking clean.
Keep a session log. Note the date, site/app, game or bet, stake, result, and net win/loss. Add a running total.
Save proof. Keep W‑2G forms (US), payout emails, bank or e‑wallet records, and any site statements.
Plan for tax. In the US, if you have big wins and no withholding, consider quarterly estimated tax. See IRS: Estimated taxes.
Ask support for a year-end statement. Many sites can give this if you ask.
Talk to a pro if your numbers are large, if you play across borders, or if you use crypto.

Common mistakes that cost players money

Not reporting wins because no tax form arrived. In the US, you must report all wins. See Topic No. 419.
No records. Then you may lose legal deductions (US). Keep a log and proof.
Forgetting state or city tax. This can lead to a bill and penalties.
Crypto errors. People miss that a coin disposal can be a tax event too.
Playing on unlicensed sites. They may not give statements. Cashouts can be slow. Records can be messy.

FAQs

Do I pay tax on online casino winnings?

It depends on your country. In the US, yes, all gambling winnings are taxable. In the UK, casual players do not pay tax on gambling wins. In Canada and Australia, casual wins are usually not taxed. In the EU, rules vary by country.

Are free bets and bonuses taxable?

If a bonus leads to cashable profit, your net gain can be taxable in countries that tax wins (like the US). In countries where player wins are not taxed (like the UK), it is usually not taxed to the player.

How do I report gambling winnings in the US?

Report on Form 1040, Schedule 1 (Other income). You may get a W‑2G for some wins, but you must report all wins. If you itemize, report gambling losses on Schedule A. See Schedule 1, W‑2G, and Schedule A.

Can I deduct gambling losses in the US?

Yes, but only if you itemize. You can deduct losses only up to your total wins. You cannot use extra losses to offset other income. See Publication 529.

Do I owe state tax on gambling wins?

Often yes. Many states tax gambling wins. Check your state tax site for the current rule and rates.

What about crypto gambling?

You may have tax on the gambling win and also a capital gain or loss on the coin you use or receive. Keep dates, amounts, and screenshots. See IRS crypto FAQs.

Do non‑residents owe US tax on gambling wins?

Sometimes. There can be 30% withholding on US‑source wins, unless a tax treaty changes it. See Publication 515.

Are UK/Canadian/Australian players taxed on wins?

UK: No income tax on gambling wins for players. Canada: Casual play, usually no; business‑like play, maybe yes. Australia: Casual play, usually no. Check official links above.

Bottom line and resources

Bottom line: Tax on gambling depends on where you live. In the US, report all wins and keep records so you can claim losses (up to your wins). In the UK, Canada, and Australia, casual players usually do not pay tax on wins. In the EU, rules differ by country. Always check your local tax office and use licensed sites that give clear statements.

Useful links:

US: IRS Topic No. 419 | Publication 525 | Publication 529 | About Form W‑2G | Schedule 1 | Schedule A
UK: HMRC: Gambling duties | HMRC manual: Gambling and lotteries
Canada: CRA IT‑334R2: Miscellaneous Receipts
Australia: ATO: Prizes and awards | ATO: Business or hobby?
EU overview: European Commission: Online gambling

Disclosure: This article is for general information. It is not tax or legal advice. Rules change. Your facts matter. Please speak with a qualified advisor in your area.