Because these are luck-based, taxpayers cannot have had an expectation of consistently profiting, and therefore these gains will not be taxable.īecause of the skill elements in games like poker or blackjack, winnings from these games can be seen as either windfalls or income, depending on the person earning it. Some categories of winnings that are fully luck-based will always be seen as windfalls, such as lottery, slot machine, or roulette winnings.

Ultimately, this means that gambling revenue being classified as income or not is based on whether the taxpayer expected to profit from their gambling. By contrast, any unexpected gains are seen as windfalls. To be classified as business income, the taxpayer must have had a reasonable expectation of profit from the activity, which is based on their skill, consistency, and intention. Gambling revenue will either be a windfall gain, which is not taxable, or business income, which is taxable. Please note that each situation is unique, and if you are gambling and think your income may or may not be taxable, you should consult with a lawyer for a true determination.ĭetermining what is income is usually very complex, but for the purposes of gambling, it’s much simpler. This brief guide provides clarity as to when gambling gains can be taxable as income. However, it’s important to know the basic tax consequences of gambling. When you’re placing a bet, whether it’s on a hockey game or at the poker table, taxes are probably the last thing on your mind.

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