How & Why Betting Taxes Vary Across Countries

Most crypto gamblers do not care about taxes, as they never disclose their winnings to government authorities since, unlike fiat gambling, the crypto kind introduces unique complexities when it comes to taxation. These originate from the poorly regulated nature of digital coins (which is now changing), their volatility, and their decentralized/anonymous-centric design. For many, not just gamblers but regions around the globe, crypto gambling winnings are still a gray area, even though, in theory, these prizes should be taxable as fiat betting/gaming rewards.

Tax authorities in some territories now classify cryptocurrency as property, not actual currency. Nevertheless, this still means getting many of them can trigger a taxable event. Nonetheless, such specifics heavily depend on a gambler’s place of residence, and authorities are usually powerless to do anything if a person keeps all their crypto funds in virtual form and uses platforms that do not impose any KYC measures. Doing that allows casual crypto gamblers to fly under the radar and not face any tax obligations, as self-reporting is expected in most countries, especially when there is a lack of centralized records and government agencies have no insights.

With all that out of the way, let us get into how and why different nations worldwide choose to tax gambling as an entertainment-based activity. Make no mistake about it, countries make loads off this sector, with the UK collecting £3.6 billion in betting and gaming duties in 2024/25 according to the Office for Budget Responsibility. Hence, the more developed a country’s gambling industry is, the more regulation it has, and usually, the heftier its tax rates are. Still, these things vary, as different regions have different relationships with this sphere and go about taxation in different ways that impact bettors and operators differently.

The Mechanics of Betting Taxes

Betting taxes come in multiple forms. Technically, they come in three chief ones. The first is taxing gambler winnings. These hit bettors’ profits directly. In the US, federal law dictates that everyone must fork over 24% on winnings over $600 for certain types of gambling and $5,000 for others. But that is not all. Then come state cuts, as most US regions have legalized gambling to benefit from allowing gambling-related pastimes. For example, New Jersey imposes a 3% rate on top of the 24% federal withheld one, and Pennsylvania has a 3.07% state rate.

Gross gaming revenue (GGR) taxes are too a thing. The UK levies 15% on sports betting and up to 50% on casino winnings (high-revenue operators). Denmark’s tiered GGR ranges from 20% (sports) to 75% (online slots – highest-revenue tier). New York has a 51% GGR tax on online sports betting, something that gave the Empire State $691 million in taxes in 2023.

You also have turnover taxes that tax every dollar wagered. Kenya had a 20% such rate in 2019. We are unsure if it is still active.

These different mechanics serve different purposes. For instance, winnings taxes deter big bettors, while GGR ones fund government coffers without scaring players, and turnover taxes control volume but risk flight.

Regulatory Influences

Laws sculpt the tax terrain. In the UK, betting legally gets classified as gambling, a separate category. It is not just income. Because of this, gamblers pay zero tax. It is operators that get burdened with the weight of compensating the state for these pastimes being enjoyed through a 15%-50% GGR levy. Canada also does not consider gambling prizes as generally taxable. That is on account of laws in the Great White North considering games of chance and betting on horse/dog races/sports as hobby activities, not ones aimed at earning someone a living. But, if a person partakes in these activities with businesslike behavior, then Canadian authorities will seek to tax his income from it but allow his losses to get marked as deductibles.

Other countries that do not tax winners are Austria, Australia, Belgium, Malta, Romania, Sweden, Hungary, Germany, Italy, Denmark, and the Czech Republic.

That said, as noted, in the US, winnings get ranked as taxable income under the IRS code, with gamblers getting docked 24% federally on their prizes, on top of state rates, which can be 8.82% in New York, 13% in California, and nothing at all in places like Florida and Nevada.

Again, much of the tax rules come down to legal definitions on what is gambling vs. income. Then, what is the regulatory aim? Is it to control this sector or allow it to grow so more tax revenues can pour in from it? Nevada is a US state heavily dependent on casino gambling, so it does not allow operators to offer online platforms, so the availability of these does not impact how many people go to land-based venues. It also does not tax winnings to make tourists come here to play.

Cultural Attitudes & Taxes’ Effect on Bettors

Yes, culture too colors tax policies, quite vividly so, if you allow us to be a bit prosaic. In the UK, betting is a super mainstream pastime, primarily due to the popularity of the EPL, which causes close to half of adult male Brits to wager at least once per year. So, UK governments have to keep voters happy but still look to profit from this massive sector, which they do by fitting the bill to operators. They cannot impose taxes on winnings because gambling is so widely accepted in the UK, especially in horse racing and football. It is the same in Nordic nations like Denmark and Sweden, where these countries’ leaders see gambling as a state-run utility. That is why they tax operators, and use the funds collected from gambling companies to fund welfare programs. Remember that moral stances shift burdens. Kenya’s 35% turnover tax mirrors public backlash regarding allowing gambling.

It should go without saying that taxes affect bettors in various ways. For one, since they take a chunk of net winnings, they need to account for post-tax earnings when wagering, which influences risk assessment. Those trying to make a living from sports betting often consider relocating to more gambling tax-friendly jurisdictions, or they look to dominantly play in crypto to avoid taxation. Although the latter, while it may work, can cause difficulties in withdrawing (in fiat) and using winning funds down the line, as they have to explain to government authorities why out of nowhere they have so much money.

In the US, some gamblers have noted a phenomenon where taxes have inadvertently encouraged bettors to increase their wagers. Because losses are only deductible with itemized deductions, and itemizing makes sense if total deductions exceed the standard deduction, some gamblers have stated feeling pressured to bet more to justify itemizing.

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