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Everything you need to know about casino taxes
The gambling industry makes some seriously big money, with revenue in most countries in the billions, so it should probably come as no surprise that it's pretty heavily taxed in the majority of countries worldwide. The exact amount of taxation varies across the globe, especially online, but if you're hoping to make some money playing at the casino or having a flutter on some upcoming sporting events, it might be a good idea for you to make sure you're aware of the different tax laws and regulations for your area. Knowing the law before you cash in that free spins no deposit bonus is a vital step in playing it safe online!
The U.K. has had a long history with gambling, back in the 19th century the Gaming Act, 1892 set up the only legal means to gamble at horse-racing and greyhound tracks with the Tote. This was initially not taxed, but as illegal bookmakers began to crop up and began making hefty profits, the government started to realise that they were missing out on a lot of tax revenue. In the early 60's, parliament passed the Betting and Gaming Act, 1960, which allowed bookmakers to open their doors and start taking cash bets legally- but they would operate under a levy that taxed the bookmaker 6.75% on transactions. The bookmakers, understandably, dealt with this by passing it on to their customers in the form of a 9% betting tax which could be paid when placing the bet or collecting the winnings. Since 9% of the win could be significantly more than 9% of the bet, most people chose to pay it when they were placing the bet.
Over the next 40 years, the gambling landscape changed dramatically with the invention of the internet, and the ease of phone and online gambling made it possible for bookmakers to start to migrate overseas and operate in areas that functioned as offshore tax havens. The UK government adjusted the law in 2001 to address this and the levy was changed into a 15% tax on bookmakers' gross profits which meant that punters no longer had to pay tax on their bets or winnings! At least, not a formal one, the bookie still set their rates and odds after all. Due to the sheer amount of overseas gambling organisations, this law changed again with the Gaming Act, 2005- making it easier for bookmakers and online casinos to operate within the UK. And once more in 2014, with alterations to the licensing regulations so anyone acquiring a license will need to submit to a 15% Point of Consumption tax on gross profits, to close off overseas loopholes.
In summation, players don't have to pay any tax on winnings, but bookmakers are still paying a tax on their revenue.
The United States
The law in America is a little different, being a notable exception to the overall trend, in America any winnings you make are going to get taxed and the rate will stay about the same at 25% of whatever your winnings are. This holds true whether you win $2,000 or $2 million, the rate of tax stays the same. You're only going to need to pay the tax once your winnings hit a certain threshold though and it varies from game to game, for instance, the limit is $600 at the horse track, $1,200 or more playing slots or bingo and $5,000 for poker. As long as you don't make this amount back from a single bet then the Inland Revenue Service (IRS) is unlikely to be particularly interested, but it's important that you keep a record just in case you get audited and they want to find out where your extra couple of hundred dollars came from. The one benefit for American gamblers is that you can write-off your losses as long as you have a record of the betting (which is very simple in an online casino as there's an easy to follow data trail) but the losses you can claim back can only be equal to your winnings, so be careful! It's also worth noting, some states forbid online gambling so make sure you know what your state law is before you bet!
Tax laws when it comes to online gambling change depending on where you live, but most places across the globe won't tax your gambling wins - for example, if you wind up winning big in New Zealand or Australia you won't pay any tax as they don't consider it a profession, only a hobby. Or, if you hit it big in Canada, while their tax system is very similar to Americas, they don't count gambling income as something to be taxed so you get the full value of your winnings! In addition, Denmark, Italy, Sweden and Romania also won't take any tax from your winnings. Countries that will though include France (with 2% on poker wins) and South Africa with a 6% tax on horse racing wins. If, by chance, you win the lottery in Slovenia, be careful as the tax on it is a whopping 50%!
Provided you know the laws in your area when placing the bet, you're sure to be fine - now get out there and play!