Gambling Tax Canada: Are gambling winnings taxable in Canada?

When you’re placing a bet, whether on a hockey game or at a poker table, the question, ‘Are gambling winnings taxable in Canada’ is probably the last thing on your mind. However, it’s important to know that those winnings may be subject to federal and provincial income tax regulations.

This guide explains how gambling tax laws in the Great White North work. We will explain how gambling tax regulations vary by province, if you owe the tax man anything, and if so, how much.

Taxes on gambling winnings Canada

When it comes to paying taxes on gambling winnings, Canada says the average gambler who plays for fun doesn’t need to pay. This is in accordance with Canadian gambling laws.

That’s because paragraph 40(2)(f)(ii) of the Canadian Income Tax Act treats gambling winnings, including lottery wins, as purely luck-based or a ‘windfall,’ not as regular business income or received as part of a business activity.
In the case of professional gamblers, those playing on Canada gambling sites for profit, the Tax Act demands they declare their gambling winnings as taxable income. But what is professional gambling in Canada?

The Canada Revenue Agency (CRA) employs a few qualifications to determine if someone is a professional gambler:

• If you use gambling as your primary income source
• How much forethought and strategy has been invested in the gambling activity
• If any inside information or specialized knowledge was used while gambling
• If the individual intentionally gambled for profit or fun
• If the individual travels and attends tournaments to gamble
• If the player placed bets regularly and frequently

As such, for those who fall within this definition, gambling taxes in Canada range from 14% to 33%, depending on the amount won within a tax year, plus provincial taxes. And that’s regardless of whether it took place in online casinos, land-based venues, sportsbooks, or even from horse racing events.

Below is a brief rundown of Canada’s federal tax rate as of 2026:

• 14% on the portion of taxable income up to $58,523
• 20.5% on the portion of taxable income over $58,523 up to $117,045
• 26% on the portion of taxable income over $117,045 up to $181,440
• 29% on the portion of taxable income over $181,440 up to $258,842
• 33% on the portion of taxable income over $258,842

Important to remember is that professional gamblers must report and pay taxes on their gambling winnings, whether they are playing at provincially licensed or offshore gambling sites. Likewise, they can write off gambling losses, but only from their winnings.

Taxes for interest on gambling winnings

While many countries charge some form of gambling winnings tax, Canada does not. Casual or recreational gamblers do not pay any gambling tax. However, if the player uses such winnings to invest, the interest earned must be declared on T3, T5, and T5013 tax forms during the tax season, and the relevant taxes must be paid. For example, suppose you stash your winnings in a savings account or invest them in dividend-paying stocks. In this case, you must declare the additional amount earned and pay tax on it at the applicable tax bracket.

The reason is that the CRA treats the returns as standard investment income, taxed at your marginal rate. The original gambling winnings that funded the investment remain non-taxable; only the growth on top is subject to tax.

As such, players who win large sums are often advised to consult a tax professional before putting their winnings to work. Knowing exactly where your tax-free allowance stops and your taxable investment income kicks in could spare you a nasty surprise when tax season rolls around.

Are casino winnings taxable in Canada?

Whether they’re heading to a physical location or logging on from home, Canadians have long turned to casinos as their go-to way to gamble. But do you have to pay tax on casino winnings Canada?

The simple answer is no for amateur gamblers. Provided you play at land-based or online gambling sites in Canada infrequently and just for social fun, you’re not liable to paying taxes on casino winnings Canada. That’s because the ‘windfall’ rule applies, even when playing games that demand an element of skill like poker and blackjack.

But for professional gamblers who qualify for taxation under the CRA’s standards, their winnings would be treated as business income under Section 9(1) of the Income Tax Act. Backed by several court cases including the historical 2006 Leblanc vs. The Queen, these standards require gambling winnings to be consistent, deliberate through the use of a skill or inside information, and businesslike in nature to be considered professional gambling.

Is sports betting taxable in Canada?

Again, the answer to ‘Do you have to pay sports betting taxes in Canada?’ is no. For the majority of people who enjoy wagering recreationally in Canada and come into a windfall gain, such wins are not considered income and are not taxable. That means such players are not entitled to pay taxes on sports betting winnings.

Professional gamblers, however, must pay taxes on sports betting in Canada, whether playing at regulated casinos, offshore sites, or land-based venues. Such winnings are classified as taxable income under Canada’s gambling tax laws and are taxed based on the total profits earned throughout the year and the province in which the player lives.

Are lottery winnings taxable in Canada?

Lottery winnings are entirely luck-based, whether you’re an amateur or a professional gambler. And, as such, they are tax-free in Canada. Section 40(2)(f) of the Income Tax Act explicitly rules out lottery winnings as taxable income, so there are absolutely no casino jackpot taxes to pay. And this is true whether you win the National Lotto 6/49 or a provincial lottery like the PEI Lottery or the Ontario/49.

The only time you may be taxed for winning Canadian online lottery games is, as we’ve discussed before, the interest earned from investing such winnings. Whether it’s capital gains or investment income, any additional profit earned from lottery winnings put in a savings account or invested in a business is taxable. The same applies if you repackage such winnings as gifts to family and friends.

Worth noting is that these rules only apply in Canada. Lottery winners in the US must pay taxes on their winnings.

Taxes on gambling winnings Ontario

Do you have to pay taxes on gambling winnings Ontario? Well, if you’re not a professional gambler, like Toronto’s poker pro, Daniel Negreanu, the answer is no.

The Ontario online gambling industry stands out as the first regulated market in Canada. Since April 4, 2022, 80+ gambling websites have valid licensing from the provincial regulator, the Alcohol and Gaming Commission of Ontario (AGCO).

Likewise, legal online casinos in Ontario have also signed operating agreements with iGaming Ontario, the market conduct-and-manage crown entity. This creates a unique situation for Ontario players, who enjoy exceptional choice and innovation within a safe, closely monitored environment.

As for land-based casino play, the AGCO still handles licensing and regulation of the likes of Great Canadian Casino Toronto and Caesars Windsor. However, the Ontario Lottery and Gaming Corporation (OLG) is responsible for supervising and ensuring compliance with these physical alternatives.

That way, when it comes to the question ‘are gambling winnings taxable in Ontario?’ and more importantly, ‘how much of your winnings you actually get to keep,’ the answer is reassuringly simple: all of it as long as you’re a casual player.

Like Canadian tax law, provincial gambling laws don’t impose a tax on leisure players. Whether you’re hitting the tables at the Casino Rama Resort or spinning reels at your favourite licensed online casino in Ontario, casual players owe nothing to the Canada Revenue Agency on their wings.

Professional gamblers, on the other hand, must pay Ontario gambling tax on their casino winnings. This applies whether you’re playing at the Great Blue Heron Casino & Hotel or BetMGM Online Casino. Based on the amount of time devoted to pursuing gambling profits and the level of skill invested to profit from gambling activities consistently, the CRA will treat your gambling winnings or interest earned from your casino winnings as regular income and taxed according to the following personal income brackets:

• 5.05% for the first $53,891 on taxable income
• 9.15% for the portion of taxable income over $53,891 to $107,785
• 11.16% for the portion of taxable income over $107,875 and $150,000
• 12.16% for the taxable income portion over $150,000 and $220,000
• 13.16% for the taxable income portion over $220,000

Important to note that your casino winnings are not taxed in isolation. Rather, they should be declared on the relevant form (usually a T1 General Return) as business income and taxed as part of your total adjusted gross income. You can also include your losses as part of business expenses, but only up to the amount of total casino winnings reported.

Is sports betting taxable in Ontario?

Alongside the competitive online casino market in Ontario is an equally open, thriving single-event sports wagering industry. And when it comes to paying sports betting taxes in Ontario, the same rules apply as they do for casino play.

Whether you’re placing a parlay on a licensed Ontario sports betting site or walking up to an OLG retail window, the CRA treats winnings from recreational players as a windfall, making them tax-free.

The only scenario where paying taxes on sports betting winnings applies is if the CRA classifies you as a professional. And as we’ve discussed in prior sections, this is someone who bets systematically and derives a consistent income from it. Nonetheless, for most Ontario bettors, the bottom line is simple: your winnings are yours to keep.

Taxes on gambling winnings Alberta

After passing the iGaming Alberta Act (Bill 48) in May 2025, Alberta is on track to become the second regulated iGaming market in Canada. While lawmakers anticipate an early summer launch of online casinos in Alberta, another important question arises for frequent casino players: are casino winnings taxable in Alberta?

In short, no. Amateur gamblers, whether playing at Alberta online casinos or the 30+ land-based retail casinos and racetracks, still don’t have to pay taxes on their casino winnings. But like other Canadian provinces, professional gamblers must remit taxes on their Alberta casino winnings.

The only difference here is that Alberta gambling features the lowest tax rate in Canada, distributed as follows:

• 8% on the portion of taxable income below $61,200
• 10% on the portion of taxable income over $61,200 up to $154,259
• 12% on the portion of taxable income over $154,249 up to $185,111
• 13% on the portion of taxable income over $185,111 up to $246,813
• 14% on the portion of taxable income over $246,813 up to $370,220
• 15% on the portion of taxable income over $370,220

Do note that an amateur player in Alberta who invests their casino winnings and earns a profit must pay tax on it.

Is sports betting taxable in Alberta?

Winnings from sports wagering are not subject to Alberta gambling tax for everyday, casual players betting for fun. However, if you treat your experience at Alberta sports betting sites like a job or business, with the intention of earning a profit using certain skills, inside information, or strategy, then you must declare and pay tax on sports betting winnings.

The same applies to casual or professional players who invest their sports betting winnings and earn additional amounts.

Gambling tax laws by province

While gambling regulations vary by province and territory in Canada, the federal tax treatment of winnings remains largely consistent nationwide.

And while Ontario and, soon, Alberta are the only Canadian provinces with a regulated iGaming market, it’s important to note that all other Canadian provinces and territories have only government-run online casinos/sportsbooks. However, players in these provinces usually play online on internationally licensed platforms, as they offer more choice in games, bonuses, and betting options.

Nonetheless, regardless of where you play, you must pay provincial and federal income tax as a professional gambler and for interest earned on gambling winnings. The table below reveals the type of taxes you’ll need to pay on gambling interest in each Canadian province.

Canada gambling tax calculator

Canadian provinces don’t impose tax on gambling winnings in most cases. That’s because most Canadians gamble casually and for fun, meaning a Canada gambling tax calculator is rarely needed. In fact, for recreational players, there’s generally no need to use a gambling tax calculator at all. So, if you’re wondering how to avoid taxes on gambling winnings, you’re in the clear.

For professionals or if you earn interest on your gambling winnings, however, standard federal and provincial income tax rates will apply.

Understanding US gambling tax recovery Canada

Are you a Canadian resident who has hit a jackpot win at an American casino? Congratulations on your big win.

But you’re probably surprised the casino or gaming facility has withheld 30% of your gambling winnings. And with it, a Form 1042-S, Foreign Person’s US Source Income Subject to Withholding, that states the amount won alongside the amount of tax withheld, should be on hand.

The good news is you can get a gambling tax refund. This is because lottery and gambling winnings are not taxable in Canada. Plus, even if you’re a pro, gambling losses are tax-deductible in Canada.

So, if you visit a Michigan casino, a popular destination for Canadian casino goers, and the facility applies the 4.25% state tax rate on gambling winnings, in addition to the 24% federal tax withholding rate, it’s important to know you can file for a potential full or partial gambling tax refund.

Under the Canada-US Tax Treaty, Canadians have a straightforward path to recover the withheld amount. The treaty also allows Canadians to offset their US gambling losses against the winnings within the same year. And if your losses are equal to or greater than the gambling winnings, you’re eligible for a full casino winnings tax refund, provided you prove the losses.

So, how do I prove gambling losses on my taxes? Well, it all starts with submitting the right documents. These include:

• A detailed log/diary with the dates, names of venues, and type of gambling activity engaged in
• Relevant supporting documents, including the receipts, tickets, cancelled checks, casino win/loss statements, and the likes

Such documents should be attached on Schedule A (form 1040) where you’ll itemize your deductions.

Once you have these documents, you’ll need to file a US tax return using a US Non-Resident Tax Return (Form 1040NR). Alongside this form, you’ll also need to provide the following:

• Your US gambling tax slips (Form 1042-S)
• Your Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN)
• A copy of your Canadian passport

Once you file the correct documents, it will take about 7 to 8 weeks for you to receive your US gambling tax refund under normal circumstances. However, the Internal Revenue Service (IRS) says on its website that it can take a minimum of 6 months. Refunds are usually mailed directly to your physical address via a treasury cheque from the IRS. However, if you have a US bank account with a US bank, the refund can be deposited directly into it.

Sum Up: Canada Gambling Taxes

When it comes to ‘are gambling winnings taxable in Canada?’ Canadian players are among the luckiest in the world since they don’t need to pay gambling taxes. But this is only for recreational players. If you’re a pro, then you’re required to pay the relevant federal and provincial income tax rate.

This is unlike their counterparts in the United States, down south. But provided you’re a Canadian resident, you can file for a refund under the Canada-US Tax Treaty. Just make sure you keep a record of your wins and losses, and have the right documents ready, and you’ll be well-positioned to recover what’s owed to you.