Gambling Tax Rates Around the World
Tax regulations for gambling vary from country to country. There is zero tax in some countries while others outlaw all forms of gambling.
Certain countries have legalized the practice but have many laws in place that tax all income from any winnings. Sometimes, these taxes are exorbitant, and, in some cases, they can be very low. Places like the latter are ideal for both casino players and operators.
So what do gambling taxes look like worldwide?
Similar to a lot of laws, the tax laws that govern gambling aren't laid out clearly. Instead, many exist in a grey area.
The laws generally vary depending on if gambling is your profession and if it is your main source of income. The rules will of course vary between countries. However, generally you are only taxed if gaming is your main profession or your biggest source of income.
How does this work? Well, if you earn by gambling but have a bigger source of income, you will not be taxed.
In a lot of countries such as Kenya and Ireland, the player's winnings are not taxed. In such situations, the casino operator will pay tax on the winnings that they record.
In Ireland, bookies will pay 1% of tax on all bets placed. The rate jumps to 7.5% in Kenya. This was later upped to 35% in 2017.
In Cambodia, rates were drastically reduced to bring in new business and increase investment in its gambling industry.
Some countries, on the other hand, place no taxation rules on gambling.
Keep reading as we go through a few of the countries where gambling is legal. We will also take a look at their tax rules and other information you must be aware of.
A 75% GGR can seem like an eye-watering figure at first look. However, upon reading the small print, it makes more sense. This 75% figure only applies if the GGR (Gross Gaming Revenue) is in excess of DKK 4 million.
This amounts to $612,000. If that amount is not exceeded, a land-based casino only has to pay 45%.
Rates vary in Australia depending on the state. Some states tax up to 65% on lottery winnings.
When it comes to gaming machines though, the tax rate hovers at around 25%. With table games and racing games, you can expect about 20%.
Similar to Australia, rates are dependent on the states. But here the responsibility of payment shifts on the player, not the casino.
This is easy to implement on land-based casinos, but things get a bit fuzzy when playing online. However, even if playing at an online casino, you will need to submit records and pay tax on all winnings.
Rhode Island currently taxes the highest rates at 51% while Colorado and DC rank among the lowest with 10%. Illinois and New Jersey hover around the lower mids while Pennsylvania has a rate of 34%.
GGR in the US hit a recording breaking $43.6 billion in 2019. Governments, both local and state, earned up to $10.2 billion thanks to casino taxation. There is no doubt this gave the US economy a comfortable boost.
Recent casino closures have had differing impacts on states. Take Maryland for example. Six commercial casinos closed, leading to a GGR loss of $372.5 million. This, in turn, was responsible for causing a $149 million blow to the education fund.
Over in Atlantic City, two bills were passed in support of casinos. The New Jersey city passed these bills to boost tourism and get the economy moving.
The new bills aim to reduce fees and taxes. It would mean that any casino in the city can avoid paying parking fees or hotel occupancy taxes.
The UK's unique tier tax system means that the tax rate for casinos depends on the revenue. It starts at 15% on gambling winnings up to £2,370,500 and increases to 20%, 30%, 40% and 50%.
Tax rates on online gambling
Many casino players wonder if they must pay tax on online gambling winnings. Again, this is dependent on where they are from. Those who live in Canada, Oceania, Europe or the UK will not have to pay any tax on online winnings.
If you are in the UK, you must record your winnings on your yearly tax returns.
Tax rates on Bingo winnings
If you are in the UK, bingo winnings are not taxable. These apply to slots, lotteries and even horse racing.
If you are in the US, all winnings are fully taxable. This applies to everything, not only casino winnings.
Lottery winnings, horse racing bets, off track bettings, game shows, and sweepstakes must all be recorded and taxed.
Losses can be deducted if you itemize all deductions. These losses can only be deducted up until the amount that's offset by all gambling related winnings. To take advantage of this, you must show all required records and proof of your losses and winnings.
Well, there's the complete breakdown. If you are in the UK, the tax laws allow you to take home all your winnings without any concerns. This is a position that's unlikely to change in the country.
However, if you are in the US, all winnings can and will be taxed. The IRS has plenty of ways to ensure it gets its share.
Before you begin gambling, it is important to look up your state or country's regulations. This way, you can avoid trouble and stay on the safe side of the law.