A Brief Guide to Sports Betting Taxes in Canada

Taxation is a concern for every player who places sports bets on a regular basis. In Canada, the tax treatment of gambling winnings differs from that of many other countries and has its own specifics. Below, we explain when taxes apply – and when you are allowed to keep your entire payout.

Are sports betting winnings taxable in Canada?

There is good news for Canadian bettors: in most cases, you do not have to pay tax on your winnings. Under paragraph 40(2)(f) of Canada’s Income Tax Act, gambling proceeds are considered windfall income and are not subject to taxation.

This rule applies to:

• Sports betting with online bookmakers
• Bets placed at land-based betting shops
• Casino games (both online and offline)
• Lottery winnings
• Horse racing bets

The size of the win does not matter. Whether you earn $100 or $100,000, no tax is owed to the government. However, you may still have to pay bank or payment processing fees. We discussed withdrawal-related fees from betting platforms in more detail in a separate article.

If you were about to close this page after reading that – don’t rush. In certain situations, taxes do apply, and we cover them in the next section.

When betting winnings are still taxable

Although casual players are generally exempt from taxation, there are two scenarios in which you will have to share your profits with the state.

Professional gamblers

If you make a living from betting, the Canada Revenue Agency (CRA) may classify you as a professional gambler. In this case, your winnings are treated as business income.

Signs of a professional gambler include:

• Betting is your primary source of income
• You generate consistent profits over a long period (usually several years)
• You keep detailed records of bets, winnings, and expenses
• You regularly participate in tournaments and travel to place bets
• You rely on specialized knowledge and skills to gain an advantage
• You take courses or consult experts to improve your strategies

An important point: frequent wins alone are not enough. Professional gamblers usually focus on activities that involve a skill component. Sports betting falls into this category, as it requires statistical analysis, strategy development, and staying informed about team form, injuries, and other factors. By contrast, games like slots or roulette depend purely on luck, so players are almost never recognized as professionals. That said, we do not recommend engaging heavily in such games, as they are particularly associated with gambling addiction. We discussed ways to protect yourself from this risk in this article.

Interest earned from investing winnings

The second situation applies to all players. If you deposit your winnings into a savings account or invest them in stocks, any interest or dividends must be declared as investment income. These earnings are taxed at standard rates ranging from 15% to 33%, depending on your total income.

If the interest exceeds $50, you will receive a T5 slip (Statement of Investment Income). If the amount is lower, no form is issued, but the income must still be reported.

Professional gamblers: taxation specifics

If the CRA recognizes you as a professional gambler, you are required to pay tax on your winnings.

Federal income tax rates depend on your total income:

• 15% on the first $53,359
• 20.5% from $53,359 to $106,717
• 26% from $106,717 to $165,430
• 29% from $165,430 to $235,675
• 33% on amounts over $235,675

In addition, provincial tax applies, and rates vary depending on where you live. As a result, the overall tax burden can differ significantly between Ontario, British Columbia, and Quebec.

Alongside tax obligations, professional gamblers also have certain advantages. For example, they can deduct expenses such as:

• Betting losses
• Tournament entry fees
• Travel costs related to competitions
• Education and consulting expenses
• Purchases of specialized software

It is essential to maintain detailed records of all income and expenses. This simplifies filing your tax return and helps prevent issues with the tax authorities.

Common tax mistakes made by Canadian bettors

Even with a relatively simple system, Canadian bettors often make mistakes that can lead to problems. Let’s look at the most common ones.

Confusion about the gambler’s status

Many bettors mistakenly believe that a few large wins automatically make them professionals. This is not the case. The CRA evaluates multiple factors, not just the size of winnings. The opposite mistake is just as dangerous – considering yourself a hobbyist when you are effectively a professional. If betting has become your main source of income, you regularly enter tournaments, and you use advanced strategies, failing to report earnings can result in serious penalties.

Lack of documentation

Professional gamblers frequently fail to keep detailed betting records. During a tax audit, this creates major issues. Without proof of expenses, you cannot deduct losses or related costs.

What you should record:

• The date of each bet
• The amount wagered and the odds
• The outcome (win or loss)
• The bookmaker
• All receipts for related expenses

Use dedicated software, Excel spreadsheets, mobile apps, or even a simple notebook. The key is consistency.

Gifting winnings without considering the consequences

Have you won a large sum and want to help relatives? Proceed with caution. Canada does not impose a gift tax on the recipient, but if the person deposits the money into a bank, the interest earned will be taxable for them. In addition, large transfers can attract attention from banks and tax authorities, who may ask about the source of funds. Keep all documents confirming the origin of the winnings.

Attempts to deceive the tax authorities

Some professional gamblers try to hide income, assuming that bookmakers do not report information to the CRA. This is a risky approach. The agency can review bank accounts, transaction histories, and lifestyle indicators. A mismatch between declared income and actual spending will raise red flags. Penalties for tax evasion start at 50% of the unpaid amount, and criminal charges are also possible. Honesty is far more cost-effective than deception.

Ignoring provincial differences

Moved to another province? Tax rates have changed. Many people forget to update this information in their return and end up using incorrect rates. The difference can be substantial: Alberta’s base rate is 10%, while Quebec’s is 14%. For a professional gambler earning $100,000, this gap can amount to several thousand dollars.

Refusing professional assistance

When winnings grow or the situation becomes more complex, many bettors try to handle everything on their own. A consultation with a tax specialist costs around $500–800, but it can save you thousands. An expert can help determine your status, optimize your tax burden, set up proper recordkeeping, and avoid filing errors. Skipping professional advice often backfires during an audit.

Final thoughts on betting taxes in Canada

Canada’s tax rules for sports betting are relatively lenient compared to those in many other countries. For most bettors, winnings are not taxable and do not need to be reported on a tax return. This applies to both online and offline betting. Questions arise when betting generates steady income or when winnings begin to function as investment capital. In such cases, it is important to understand how the CRA interprets these situations and what obligations follow.

Basic recordkeeping, preserving financial documents, and knowing your status help reduce unnecessary risks. If profits become regular, it is wise to assess the tax implications in advance. This approach provides greater confidence and allows you to focus on betting itself.

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