Paying Taxes On Casino Winnings: How to Pay Less
Players can’t keep all the money they win at a casino. Unfortunately, casino winnings are taxable, and these taxes may be substantial. As a result, many players are interested in how not to pay taxes on gambling winnings or pay less. Let’s see if this is possible.
How Gambling Winnings Are Taxed
Do you pay taxes on casino winnings? It depends on the laws of a particular country. There are pretty favorable conditions in some countries, while in others, players have to forfeit a significant part of their winnings. On top of that, the game you play and the winning amount can also matter. Sometimes players do not have to pay any taxes on their winnings at all. Indeed, some people are luckier in this life than others, and online gambling proves that.
Some countries also allow deducting losses, which may be helpful to reduce your casino taxes. Therefore, it makes sense to keep a record of the money you win and the money you lose. In addition, the taxation of casino winnings may overlap with the taxation of cryptocurrencies, which savvy players should also use for their own benefit.
Are There Any Exceptions?
The United States is a country with well-considered gambling taxation. The taxes here are high, but there are also several exceptions.
The operator must withhold 24% from the player to pay tax if the winnings reach a significant amount. This value varies depending on the game. For instance, in slot machines, it starts from $1,200, in keno – from $1,500, and in lotteries – from $5,000.
Interestingly, US casinos do not have to withhold taxes on winnings from table games such as blackjack, craps, or roulette. This is because these games are classified as games of skill, not games of luck. However, players are still required to file their taxes with the Internal revenue service but do that independently. On the other hand, professional gamblers can become self-employed and take losses into account when calculating their taxable income.
Unfortunately, this approach does not work in all countries, so let’s take a closer look at what taxes are levied on casino winnings in the world.
How Gambling is Taxed in Different Countries
As mentioned above, casino winnings taxation varies from country to country. For example, the tax rate on casino winnings can be several times higher than on regular income. Therefore, it makes sense not to declare winnings as such. But you are unlikely to do so when playing at a traditional casino since their business is entirely transparent for the state.
It is essential to realize that higher taxes for the game operator affect the players in one way or another, even if there is no direct tax. What’s more, typically, only winnings at licensed casinos are exempt from taxes. However, most online casinos operate under a single license and do not obtain permissions in each country, so your winnings may be subject to full taxation.
The taxes can be as high as 83.5% of revenue for land-based casinos. For other types of gambling, they are also very high, for example, 52.2% for online sports betting and 40.8% for online poker. Poker players in France pay 7.5% in rake compared to the industry average of 4-5%.
The standard federal taxes are 24% for US residents and 30% for non-residents. In some states, the taxes for operators can go as high as 51%. However, there is significant scope for tax reduction given the player’s losses and professional occupation.
Casinos are Macau’s primary source of income. Casino operators have to forfeit 39% of their revenue, including the tax on infrastructure development, tourism, and public safety.
In Portugal, casinos pay 15-30% of their revenue as taxes, including rake from poker tables. Players are not required to declare and pay taxes on their winnings.
Online casino winnings under €100 are not taxable. However, winnings of up to €500 are taxed at 15%, and anything above is taxed at 20%.
Winnings from licensed games are not taxed. Nevertheless, if you play at a foreign online casino that is not licensed by the local authorities, you must pay the relevant taxes in full.
Online casinos and lottery operators pay 40% tax on revenue. However, players don’t pay taxes on their winnings, regardless of whether they play at an online casino or in the real world.
Like in France, taxes for casinos may exceed 80%, depending on the revenue. Players are not taxed.
Casino operators in the UK pay 15% income tax. Local authorities require foreign casinos to be licensed and pay taxes as well, but many ignore that rule. Players do not need to pay taxes on casino winnings.
In mid-2021, the German authorities passed a controversial law imposing a 5.3% tax on online slots and poker turnover. On top of that, the standard EU tax of up to 80% is applied to the revenue of regulated land-based casinos. No extra taxes are levied on players.
Australia does not tax casino winnings. This is because local authorities consider gambling not a profession but a hobby. The winnings are interpreted as an outcome of the player’s luck and not income. However, various forms of taxes are applied to game operators, including turnover tax, taxes on player losses, taxes on profits, and license fees.
Italy differs from other nearby countries as it applies a flat tax of 20% to licensed gambling operators. Players are not required to pay taxes on casino winnings.
Gambling taxation is within the competence of regional authorities in Belgium. Therefore, taxes for operators vary by region but still apply in one form or another.
Online casinos and sportsbooks pay 28% tax. It can be as high as 75% for land-based casinos. Additional taxes are not collected from players at licensed casinos.
Players in Canada are not required to pay taxes on gambling winnings unless it is a professional occupation. However, if you go to the US, you will have to renounce almost half of the winnings over $1,200 because of taxes.
Online casinos in Hungary must pay up to 30% of their net revenue in taxes. Additional taxes on casino winnings are not charged to players.
In Finland, lotteries are the most common type of gambling. Their operators have to pay 5% of turnover and profits as taxes. Winnings are not taxable.
Singapore is raising taxes for casinos in 2022, but the new law will not affect players. Players are still not required to pay additional taxes on casino winnings.
There is only one licensed gambling operator in Sweden – Svenska Spel. It pays all the necessary taxes for its players, including online gambling.
Gambling operators in Romania must pay a 2% turnover tax on top of other fees, but players are exempt from paying taxes on casino winnings.
Malta is a major destination for online casino licensing that collects associated fees. In addition, casinos must pay 5% of the income received from the bets of local players. The players themselves do not need to pay any taxes.
How Can I Lower Taxes on Casino Winnings?
As you can see, casino winnings taxation varies significantly from country to country. In some countries, players have to pay taxes themselves, while in others, licensed operators do it for them. However, if the state strikes a high tax on the operator, don’t expect that this will not reflect on you as a player. Most likely, the casino will try to get the money back by setting a lower return to player (RTP).
Clients of licensed gambling operators are usually exempt from taxes. But let’s face it: if you play at an online casino, it most likely won’t be approved by the authorities in your country. There is nothing wrong with that since reputation, bonuses, games, and so on are of paramount importance to players, not the legal status of the casino. The online casino you play at is almost certainly licensed somewhere else, but not in your country. It means that it pays taxes in another country. So it is likely that the principle that allows you to avoid paying taxes on casino winnings will not apply in this case, while the tax rate can be excessive.
That’s why crypto casinos turn out as a fantastic way to gamble online. Using cryptocurrencies to play at online casinos, you kill two birds with one stone:
- Cryptocurrencies deliver advanced anonymity. It means that your transfers to and from the online casino will not appear on your bank statements. Therefore, nothing prevents you from paying taxes on online casino winnings not as taxes on winnings, but as taxes on capital gains or property sales, depending on how cryptocurrencies are classified in your country. Such taxes can be several times lower than the taxes on winnings.
- Apart from that, cryptocurrencies are a fairly new phenomenon. As a result, the regulation of cryptocurrencies is just being developed in the world. Some countries do not tax cryptocurrency transactions at all. Hence, when playing at a crypto casino, you can not only save on taxes but also avoid the complexities of filling out the tax forms.
Whatever the case, we urge you to respect the law and consult a tax advisor before making any decision.