How do taxes on gambling winnings in Canada compare to how other countries treat casino winnings?

Most people asking this question have a simple worry underneath it: do I owe the CRA money on what I just won? For the vast majority of Ontario players, the answer is no — and understanding why puts Canada in sharp relief against countries that tax gamblers routinely.

Canada's position: winnings are generally not taxable income

The CRA explicitly lists lottery winnings of any amount among the amounts that are not reported or taxed, unless the prize can be considered income from employment, a business or property, or a prize for achievement. That framework extends to casino winnings. The underlying logic, confirmed in CRA's own Income Tax Folio on the subject, is that games of pure chance lack the "badges of trade" that traditional business tests require — even though gambling is always undertaken in pursuit of profit. The courts have reinforced this: gambling — even regular, frequent, and systematic gambling — is something that by its nature is not generally regarded as a commercial activity except under very exceptional circumstances.

The exception matters, though. An individual's gambling activities can result in taxable business income if those activities constitute a source of income — that is, if the person is carrying on the business of gambling. There are exceptional cases where gambling has been held taxable, but these relate specifically to taxpayers who applied inside information, knowledge, and skill to their activities. A recreational player on a licensed Ontario online casino is nowhere near that threshold. One thing to note: income earned on winnings is taxable — for example, any interest you earn by investing those winnings must be reported.

How other major jurisdictions compare

United States: The contrast with Canada's southern neighbour is stark. The U.S. taxes gambling winnings as ordinary income for residents, and applies withholding to non-residents at the point of payment. As a non-resident alien in the U.S., you are subject to tax on gross gambling and lottery winnings at a rate of 30% at the time of payment — though winnings from blackjack, baccarat, craps, roulette, and the Big-6 wheel are exempt. Importantly for Canadians who travel and gamble in the U.S., U.S. lottery or gambling winnings should not be reported on your Canadian income tax return, as this income is not taxable in Canada — and you cannot claim a credit for any taxes withheld on those winnings. That last point catches many people off guard: U.S. tax withheld at source on gambling winnings is not recoverable through your Canadian return.

United Kingdom: The UK takes an approach similar to Canada's — recreational gambling winnings are not subject to income tax for players. The government instead taxes the operators directly (through a point-of-consumption duty), rather than the winners. This is a deliberate policy choice that the UK has maintained for decades.

Australia: Australia also generally does not tax recreational gambling winnings for individuals. Like Canada and the UK, the philosophical basis is that winnings from games of chance are not "income" in the ordinary sense. Professional gamblers can face a different analysis, but that is fact-specific and uncommon.

Countries that do tax winners: Several European jurisdictions — France and Germany among them — impose taxes on gambling winnings at various rates, though the mechanics differ by game type and whether the gambling occurred at a licensed domestic operator versus offshore. The United States remains the most notable example of a major English-speaking country that taxes player winnings directly and aggressively.

What this means practically for Ontario players

Playing on a regulated Ontario online casino — one carrying the iGaming Ontario and BetGuard logos that signal it is managed by iGaming Ontario and regulated by the AGCO — means your winnings flow to you without the operator deducting tax at source, and without a CRA filing obligation arising from the win itself. That is the direct benefit of Canada's approach. The situation would look very different if you were a U.S. resident playing in a U.S. casino, where withholding happens automatically on larger wins.

The one scenario where a Canadian gambler should genuinely consult a tax professional is if gambling has become a systematic, skill-based, primary income-generating activity — at that point, the CRA's business-income analysis could apply. For everyone else, your best approach after a significant win is simply to do nothing right away, and in the case of very large wins, consult financial, tax, and legal advisors before deciding what to do with the money.

Ontario's legal gambling age is 19+. If gambling ever stops feeling like entertainment, ConnexOntario is available at 1-866-531-2600.