Does sports betting get taxed? That’s the question I will address today, and that’s the question many ambitious punters have in the back of their minds when gambling. And to be fair – it’s a question that is very important, especially if you end up raking in the money through your sports betting activities. Of course, this isn’t guaranteed, nor should it be expected. But this doesn’t remove the need to address the question – does sports betting get taxed?
For the purpose of providing the most appropriate answer, I’m going to answer this from the angle of the punter, rather than the bookmaker. After all, since bookmakers are licensed and regulated businesses, these guys know how it works with taxes and other financial elements. Yet, as individual sports bettors, it’s normal to be curious about how taxes work, whether winnings need to be declared, whether there are thresholds in place, etc.
All of this can be both confusing and concerning for punters. Again, this is completely understandable. However, since you are actively seeking an answer, I can assure you that once you’re done reading the sections below, you’ll be more at ease with how this all works.
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Does sports betting get taxed? UK laws and what this means
Whether in the UK or elsewhere in the world, we all know that taxes apply to any form of income. In fact, taxes apply to many other things, such as your house, car, and many other things. We might not like it, but it’s a part of life. As for whether sports betting gets taxed, this falls into a category that displays ‘unicorn-like’ characteristics, in a very good way. I say that because guess what – sports betting isn’t taxed in the United Kingdom!
Note that when I say ‘sports betting’, I am directly referencing sports betting profits, as this is still constituted as income. And there is a very specific reason that sports betting is not taxed in the UK, all thanks to the laws surrounding gambling.
UK gambling laws and the impact on sports betting tax
While many things in the UK are taxed, as referenced above, sports betting, and gambling in general, has escaped the gaze of the tax man. This is true no matter how small or large your winnings from sports betting might be. For example, if you were £100 in the green in any given tax year from sports betting activities, you’d be taxed the same as someone who was £1,000 in the green – zero! And the reason is that ‘gambling profits’ in the United Kingdom do not count towards the tax allowances and various thresholds that are in place.
There are only a few other forms of income in the UK that escape taxation, which you can check out in your own time if you like – it makes for interesting reading. However, for the gambling category as a whole, which sports betting fits into, any proceeds/profits are completely tax-free. As for standard income, the only way you receive 0% in income taxes is if you earn £12,570 or less in any given tax year.
This shows how great it is that sports betting isn’t taxed in the United Kingdom. Of course, the implications of this are magnified the more you gain from such activities, especially since the highest tax bracket in the UK is 45%. However, if you are based in the UK and you take home a wedge in sports betting profits, you should count your lucky stars, as other parts of the world are not so lucky.
Other parts of the world – does sports betting get taxed?
At this point, I hope it’s clear that concerning the tax implications of sports betting in the United Kingdom. Yet up until now, I’ve only focused on the United Kingdom, ignoring the other countries of the world where sports betting is legal. So in the interests of covering this topic in enough detail to satisfy the masses, let me cover some other countries where sports betting is a big industry.
USA
The sports betting industry has exploded in the USA in the last 5-10 years. With changes in the legal status of this activity, sports betting is now widely available, and I can’t see the industry's growth slowing down anytime soon. But for punters, the tax laws aren’t fantastic, as sports betting profits are subject to anywhere from a 1% to 25% tax, depending on the state.
Australia
In Australia, the sports betting landscape is similar to the UK, only with a few key differences. Specifically, sports betting profits, and indeed, gambling profits, are tax-free up to the $1 million threshold. Anything earned beyond that mark is taxed at 10%, and this rate is set to increase to 15% from 2024 onwards.
Canada
Sports betting tax laws are equally as favorable in Canada as they are in the United Kingdom. Of course, this means that sports betting isn’t taxed in Canada for any and all profits from legally made wagers. Yet if you dive into the legislation, there is a curious law that states that if you earn interest on sports betting/gambling proceeds, this is taxable.
New Zealand
New Zealand has arguably the most amusing of all tax laws surrounding gambling winnings. In short, sports betting proceeds, and proceeds from other betting-related games are not taxed in New Zealand. But when filing taxes each year, there is a section on the form for people to voluntarily declare tax winnings, which they would then pay tax on. Needless to say, most residents ignore this option!
