Are Gambling Winnings Taxed in Canada? 2025

Updated March 2025 — bremo.io

This is one of the most searched tax questions in Canada: do I have to pay tax on my casino winnings, sports betting profits, or poker tournament prize money? The answer is nuanced — and it matters significantly whether you are a casual recreational gambler or a professional. This guide explains the CRA's position on gambling winnings in 2025, including lottery prizes, online sports betting, poker, and casino games.

The General Canadian Rule: Gambling Winnings Are Not Taxable

Canada's Income Tax Act does not specifically address gambling winnings, but the courts and the CRA have consistently held that winnings from games of chance by recreational gamblers are not taxable income. The reasoning is that gambling is a personal activity, the outcome depends on chance (not skill or labour), and winnings represent a windfall rather than income from a source.

This means:

• Casino winnings (slots, roulette, blackjack) — generally not taxable for recreational players
• Sports betting winnings (including online platforms like BetMGM, DraftKings, Bet99 in Canada) — generally not taxable for casual bettors
• Lottery prizes (Lotto 6/49, Lotto Max) — not taxable
• Bingo and keno winnings — generally not taxable
• Horse racing casual winnings — generally not taxable

When Gambling Winnings Become Taxable: The Business Test

The CRA and Canadian courts have identified specific circumstances where gambling winnings cross from untaxed windfall to taxable business income. The key test is whether gambling has the hallmarks of a commercial activity or business:

Factors That May Make Gambling Taxable

• Systematic approach: Using a structured, repeatable system to gain an edge
• Skill-based advantage: The player has superior skill that consistently produces profit (e.g., card counting, professional poker)
• Primary income source: Gambling provides the majority of the individual's income
• Pursuit for profit: The activity is carried on with a reasonable expectation of profit rather than for entertainment
• High frequency and volume: Very regular, intensive gambling activity
• Business-like organization: Keeping records, studying opponents, treating it like a business

The leading Canadian case is Luprypa v. The Queen, where a professional pool player who systematically hustled games and earned his living from it was found to have taxable business income. Similarly, professional poker players who play tournaments full-time with a systematic approach have been found by courts to have taxable income.

Professional Poker Players in Canada

This is the most litigated area of gambling taxation in Canada. The Tax Court of Canada has ruled that:

• Recreational poker players — even those who win significant sums — are generally not taxed
• Professional poker players who play full-time, study the game systematically, rely on poker income, and approach it as a business may have taxable income

The distinction is fact-specific. A player who wins $50,000 at the World Series of Poker as a one-time recreational player is unlikely to be taxed. A player who earns $200,000 per year from regular online and live poker as their primary occupation is more likely to be considered in business.

Sports Betting and Online Gambling

Canada legalized single-event sports betting in August 2021, and provinces have since launched regulated online sports betting markets (Ontario's iGaming Ontario market is the largest). U.S.-licensed sportsbooks like BetMGM, FanDuel, and DraftKings now operate legally in Ontario.

For recreational Canadian sports bettors, winnings remain generally non-taxable. For individuals who systematically handicap sports and treat betting as a primary income-generating activity with a proven edge, the CRA could argue their winnings constitute business income — though this is relatively rare in practice for sports bettors.

Lottery Winnings in Canada

Lottery prizes — including Lotto 6/49, Lotto Max, and provincial lottery draws — are completely tax-free in Canada. There is no distinction based on prize size. A $70 million Lotto Max jackpot winner pays zero Canadian income tax on the prize. This is one area where Canadian tax law is unambiguously more generous than U.S. tax law (where lottery winnings are taxed federally and in most states).

However, interest or investment income earned on lottery winnings after you receive them is taxable as investment income.

Casino Winnings: The Practical Reality

In practice, the CRA rarely pursues casual casino patrons over occasional winnings. The risk increases significantly if:

• You gamble frequently and generate large winnings relative to your other income
• You can demonstrate a system or skill-based edge
• Gambling is your only or primary income source
• You keep detailed records suggesting business-like activity

Gambling Losses: Can You Deduct Them?

For recreational gamblers, gambling losses are not deductible — you cannot claim losses against other income. This is consistent with winnings not being taxable: the activity is outside the tax system entirely for recreational players.

For professional gamblers with taxable business income from gambling, losses in losing periods can be deducted against income from winning periods, consistent with normal business income rules.

Gambling Winnings and Registered Accounts

Gambling winnings themselves are not "earned income" for RRSP contribution purposes. You cannot contribute lottery or casino winnings to an RRSP beyond your existing contribution room. However, you can invest gambling winnings in a TFSA (within your available room) or a non-registered account.

If You Receive a T4 or T5 for Gambling Income

Some venues or tournaments may issue tax slips for certain prizes or winnings. If you receive a T4 or T5 from a gambling source, you must report it. The issuance of a slip creates a paper trail that the CRA can match to your return.