Which Countries do not Tax Winnings of Pro Sports Bettors?

[sportsbettor5]

My understanding (please correct me if I'm wrong) is that the UK does not tax proceeds from betting, period.

I have also heard that Australia might be in this boat.

Which nations allow the professional sports bettor to pay zero income tax on winnings?

On the other hand, nations like Canada and Ireland seem to be in a grey area in which the bettor could get hit with income tax if the relevant tax authority determines him to be a professional.

On the opposite extreme is the US, of course. US citizen bettors can't even escape their tax requirement by leaving the country.

 

[Ace7550]

Never heard of this. I can't believe UK wouldn't tax this. Especially for professional gamblers.

 

[rolandcorts]

Never heard of this. I can't believe UK wouldn't tax this. Especially for professional gamblers.

I can't believe that the U.S. freerolls gamblers, taxing their winnings ("that's income!") but not allowing them to deduct gambling losses ("you're a degenerate loser, that's your problem!"). But then again, knowing the U.S., it's no surprise.

 

[sportsbettor5]

I can't believe that the U.S. freerolls gamblers, taxing their winnings ("that's income!") but not allowing them to deduct gambling losses ("you're a degenerate loser, that's your problem!"). But then again, knowing the U.S., it's no surprise.

This isn't true for pro gamblers though. All gambling losses are deductible on Schedule C. Even recreational gamblers can deduct losses by itemizing, though they then lose the ability to take the standard deduction.

Never heard of this. I can't believe UK wouldn't tax this. Especially for professional gamblers.

There are a ton of websites saying that UK doesn't tax pro gamblers. For example:

Essentially betting is ‘tax-free’ in the UK – the professional gambler is outside the scope of tax. This is confirmed in HMRC’s Business Income Manual at BIM22015. The basic position is that betting and gambling, as such, do not constitute trading. This is not a new precedent either. Rowlatt J said in Graham v Green (1925) 9 TC 309: “A bet is merely an irrational agreement that one person should pay another person on the happening of an event.”

 

[rolandcorts]

Losing ability to take the std deduction for many would be a significant downside.
Some states do not allow any deductions of losses like, if I recall correctly, Illinois.

 

[Ace7550]

It's my understanding that pro gamblers are able to treat it more like a business in the US and deduct losses. Otherwise, being a pro gambler wouldn't make much sense. Margins are already small enough. You'd end up giving all your profit to the government.

 

[sportsbettor5]

It's my understanding that pro gamblers are able to treat it more like a business in the US and deduct losses. Otherwise, being a pro gambler wouldn't make much sense. Margins are already small enough. You'd end up giving all your profit to the government.

But the pro gambler is not allowed to carry losses forward. This is very poor treatment compared to what other businesses get.

 

[aikman.tr]

No taxes in Canada on gambling wins, nor can you claim the losses as a deduction.

 

[sportsbettor5]

No taxes in Canada on gambling wins, nor can you claim the losses as a deduction.

Pro bettors do owe income tax on net profits in Canada. Here's a source, one of many.

 

[baus]

Pro bettors do owe income tax on net profits in Canada. Here's a source, one of many.

Sports, that link doesn’t work for me, if you could repost it.

BAUS

 

[sportsbettor5]

Sports, that link doesn’t work for me, if you could repost it.

BAUS

Hey BAUS, thanks for letting me know.

This page breaks things down very thoroughly. Pro bettors in Canada owe income tax on net profits, but the determination of whether or not one is a pro gambler is a huge grey area. It seems to me that legal precedent favors the gambler for now, but that courts can change course any moment.

 

[Hunch]

This page breaks things down very thoroughly. Pro bettors in Canada owe income tax on net profits,

Gambling income here is flat out classed as NON REPORTABLE

You do not report it and you don't pay tax on it, the government doesn't want to hear about it!

(see the case in the article where the moron poker player reported the income that was non reportable , the goverment happily taxed it, and then the guy figured it out and had to fight to get it back: Poker Player Peter Radonjic) The courts ruled in his favor and he got the money he paid for taxes back even though he declared to the government that he was a pro gambler.

 

[Hunch]

Conclusions from the article:

"we’ve concluded that if you’re like 99.9% of sports bettors – working full-time and betting sports on the side – you’ve got nothing to worry about when it comes to paying tax on gambling winnings, Canada residents particularly. "

"Not just that, but even if you bet on sports full time and were able to make a living off it, there’s still a very strong chance you’d never have to pay income tax on your winnings."

"The courts have shown repeatedly that just because you are a successful, profitable gambler does not mean that gambling is your business."

"Based on legal precedent, it appears the only ways you will be ruled to be in the business of gambling is if the gambling is directly related to your profession or business, if you have access to inside information that greatly increases your expectation of profit, or if you possess tremendous skill that gives you an insurmountable advantage over your opponents. For the average sports bettor who has to win 52.38% of his bets against the point spread to simply break even, none of these conditions seem applicable.

“Rooted in the British common law, and codified by paragraph 40(2) (f ) of the Income Tax Act, Canada has a longstanding tradition of not taxing gambling winnings,”

“Unless the gambling winnings of the (gambler) are directly related to their vocation" the example given is the article is a golfer betting on himself ", or they are skilled pool or card players preying on unsuspecting marks," the example given in the article is the pro making bets with drunks" the money they win will be (almost) twice as sweet as the money they earn.”

 

[sportsbettor5]

CRA states that “an individual’s gambling activities may result in taxable business income or a business loss. This will be the case if the gambling activities constitute a source of income (that is, carrying on the business of gambling)”


But the CRA is also quick to admit that “determining the commerciality of gambling can be challenging.” That’s because what ordinarily may be viewed as a business are also common practice for anyone who gambles.

 

[sportsbettor5]

Again, the bottom line for Canadian pros is that they owe income tax but with the important caveat that past court rulings are very favorable to the pro gambler in the determination of pro status---so favorable that CRA is unlikely to try to pursue a pro for income tax and is likely to lose in court if it presses the issue.

On the other hand, court interpretations can change on a whim and the law does indicate that those carrying on the business of gambling owe income tax.

 

[caramba]

When I've done research, and it's been a while since I last did, I think UK was the only no discussion about it tax free country for gambling income, and then there are some countries where you'll probably get away with it, but you never know incase it gets tested. Canada, New Zealand, Ireland, Malta were some of those countries iirc.

 

[sportsbettor5]

When I've done research, and it's been a while since I last did, I think UK was the only no discussion about it tax free country for gambling income, and then there are some countries where you'll probably get away with it, but you never know incase it gets tested. Canada, New Zealand, Ireland, Malta were some of those countries iirc.

This is pretty much exactly my finding, with the caveat that Ireland seems almost as safe as the UK. I guess Ireland inherited almost all of its legal system from UK and sports bettors benefit.

 

[sportsbettor5]

Regarding the situation in Canada, there is some good reading here regarding professional poker players and income taxation.

 

[rolandcorts]

Regarding the situation in Canada, there is some good reading here regarding professional poker players and income taxation.

The CRA has lost every case its brought. They completely botched their case against the Leblanc brothers.

The second they try to tax gambling winnings by claiming someone is 'running a business', they'll have to address why can't losing gamblers also deduct gambling losses. After all, aren't they trying to run a business but just happen to be failing? Unlike the truly evil USA tax system (where it's heads they win and tails you lose), in this case Canada actually cares about symmetry.

The only exception is something where you're guaranteed to profit, for example if you run a poker game and collect a rake. Even if you're Negreanu, you're not guaranteed to profit ahead of time.

 

[sportsbettor5]

why can't losing gamblers also deduct gambling losses. After all, aren't they trying to run a business but just happen to be failing? Unlike the truly evil USA tax system (where it's heads they win and tails you lose), in this case Canada actually cares about symmetry.

Valid points, of course.

Regarding the bolded: I sense that Canada emulates the US a bit too much in various areas of life, and I wonder if Canada would ever try to copy the US treatment of professional sports bettors and/or poker players.