The same rule applies whether you win at a licensed bookmaker or an offshore casino, even though online gambling law in Australia treats those operators very differently. This guide explains why winnings are tax free, when the ATO treats a gambler as a business, how losses and crypto are handled, and who does pay gambling tax.
Do you pay tax on gambling winnings in Australia?
You do not pay tax on gambling winnings in Australia if you gamble for fun. Winnings from a hobby are not assessable income, so they do not go on your tax return and do not change your tax rate.
The rule covers every common form of gambling:
- Pokies and casino games: online or in a venue.
- Sports and racing bets: with a bookmaker, TAB or betting exchange.
- Lotteries and lotto: including large jackpots.
- Poker and other card games: when played as a pastime.
The ATO’s position rests on one principle: winnings are assessable, and losses deductible, only when gambling amounts to a business. Australian courts have almost never found that an ordinary punter runs a business.
Why are gambling winnings tax free in Australia?
Gambling winnings are tax free because Australian tax law treats them as windfalls from chance, not as income from work, a business or an investment. Income tax applies to earnings that are regular and expected, and most gambling is neither.
The flip side matters as much: because winnings are not income, recreational gambling losses are not deductible. A year of losses cannot reduce the tax you pay on your salary.
When does the ATO treat gambling as a business?
The ATO treats gambling as a business only when it is systematic, organised and run mainly for profit. Its guidance in Taxation Ruling IT 2655 lists the factors that point to a business:
No single factor decides the question. The ATO weighs them together, and the bar is high: three well-known cases, Evans, Babka and Brajkovich, all found the gambler was not running a business.
Are professional gamblers taxed in Australia?
Professional gamblers who are found to run a business of gambling pay income tax on net winnings and can deduct losses and expenses. In practice this group is very small, and a pure game of chance such as pokies is unlikely to qualify because skill does not drive the results.
If you gamble at a high volume with a system, records and a profit motive, speak to a registered tax agent. The ATO decides each case on its own facts, and the answer affects both your winnings and your losses.
Can you claim gambling losses on your tax return?
You cannot claim gambling losses on your tax return as a recreational gambler. Losses are deductible only when gambling is a business, the same test that makes winnings taxable.
Courts have confirmed this in both directions. In Brajkovich, a gambler with large losses tried to deduct them, and the court held that his betting was a passion, not a business, so the losses stayed non-deductible.
Do you pay tax on winnings from offshore online casinos?
Winnings from offshore online casinos are treated the same way as winnings from licensed Australian operators: not taxed for recreational players. The licence or location of the casino does not change the ATO’s hobby test.
Two practical points apply to offshore winnings:
- Bank records: large transfers from overseas casinos show up in your bank account. Keep casino statements so you can explain the source if asked.
- Earnings on winnings: interest, dividends or rent from money you won are taxable like any other investment income.
Fast withdrawals also make record keeping easier, because each payout lands as a clear, dated transfer. Our list of fast payout casinos in Australia shows measured payout times.
How are crypto gambling winnings taxed in Australia?
Crypto gambling winnings follow two rules at once: the win itself is treated like other gambling winnings, and the crypto you hold afterwards is a capital gains tax (CGT) asset. The ATO excludes capital gains and losses made directly from gambling from CGT.
When you win crypto, its cost base is its market value at the time you won it. If you later sell, swap or spend that crypto, any rise in value since the win is a capital gain. Holding it for more than 12 months gives an individual the 50% CGT discount.
Record the date, amount and market value of every crypto win and withdrawal. Our guide to crypto casinos covers how crypto deposits and withdrawals work at online casinos.
Who pays gambling tax in Australia?
Gambling operators pay gambling tax in Australia, not players. States and territories tax operators in several ways:
- Point of consumption tax: charged on wagering operators’ net revenue from customers in each state.
- Gaming machine tax: paid by pubs, clubs and casinos on pokies revenue.
- Casino tax: paid by land-based casinos under their state licences.
- GST: 10% on the gambling margin, the amount kept after paying out winnings.
These taxes are part of the reason licensed operators offer lower odds and returns than the pure maths of each game would suggest.
Do you need to keep records of gambling winnings?
Recreational gamblers do not report winnings, but keeping records still helps. Bet histories, casino statements and withdrawal confirmations explain large deposits into your bank account and show where money came from if a lender or the ATO asks.
Keep records for at least five years, the period the ATO generally asks for. Our guide on whether someone else can claim your casino winnings covers why winnings should always be paid to an account in your own name.
Does tax-free gambling make gambling a good idea?
Tax-free winnings do not change the maths of gambling: casino games and pokies return less than you stake over time. The house edge works whether or not winnings are taxed.
Treat gambling as paid entertainment with a budget you can afford to lose. If gambling stops being fun, our guide on how to stop gambling lists the tools that work in Australia, and Gambling Help Online offers free, confidential support 24/7 on 1800 858 858.
This page is general information, not tax advice. For advice on your situation, speak to a registered tax agent.
