Australia Gambling Tax: What Bettors Need to Know (2026)

Recreational Gamblers: No Tax on Winnings

For the vast majority of Australian gamblers, winnings are completely tax-free. The Australian Taxation Office (ATO) does not tax gambling winnings for recreational players.

This applies to all common forms of gambling:

• Sports betting (TAB, online bookmakers)
• Horse and greyhound racing
• Casino games (pokies, table games)
• Lottery and lotto prizes
• Poker tournaments
• Keno

If you're a casual punter having a flutter on the weekend footy, your winnings are yours to keep.

Why Australia Doesn't Tax Recreational Gambling

Australian tax law treats gambling winnings as "windfalls" rather than income. The ATO's position is that gambling outcomes are primarily determined by chance, not by systematic effort or skill.

Under this view, winning a bet is similar to finding money or receiving a gift. It's unexpected, it's not the product of labor or business activity, and therefore it's not taxable income.

This has been the consistent position for decades and applies across all states and territories.

When Gambling Winnings Become Taxable

Here's where it gets complicated: if the ATO determines you're gambling professionally, your winnings may be taxable as business income.

The ATO assesses each case individually, looking at factors like:

Volume and Regularity

• How often do you gamble?
• Is it a daily activity or occasional entertainment?
• How many bets do you place per week/month?

Business-Like Operation

• Do you keep detailed records of all bets?
• Do you use systematic strategies or methods?
• Do you have a dedicated workspace or setup for gambling?
• Do you track bankroll and results like a business tracks revenue?

Income Dependency

• Is gambling your primary income source?
• Do you rely on gambling winnings to pay bills?
• Do you treat it as a job rather than a hobby?

Skill and Expertise

• Do you have specialized knowledge or training?
• Do you use sophisticated analysis or modeling?
• Is your edge based on skill rather than luck?

Profit Motive

• Is your primary purpose to generate profit rather than entertainment?
• Do you approach gambling as a business rather than recreation?

No single factor is decisive. The ATO considers the overall picture.

The Professional Gambler Test

The distinction matters because professional gambling income is taxed at your marginal tax rate, just like employment income.

Consider two people who each win $50,000 gambling in a year:

Recreational Gambler:

• Bets a few hundred dollars on weekends
• Follows their favorite teams
• Had a lucky year with some big wins
• Tax owed: $0

Professional Gambler:

• Bets full-time as primary occupation
• Uses statistical models and analysis
• Keeps detailed records of every bet
• Operates with business-like structure
• Tax owed: Up to $14,000+ depending on other income

The same $50,000 in winnings can be either tax-free or heavily taxed depending on how the ATO classifies your activity.

Gray Area Cases

Most cases are clear: a casual punter is recreational, a full-time professional is a business. But there's a gray area in between.

What about someone who:

• Has a day job but makes significant side income from betting
• Uses sophisticated strategies but only bets weekends
• Wins consistently but doesn't rely on the income
• Keeps records but treats it as a serious hobby

These cases are fact-specific. The ATO's guidance suggests they look at the "totality of circumstances." If you're in this gray area, consider getting professional tax advice.

What Losses Mean for Taxation

If you're classified as a recreational gambler:

• Winnings are tax-free
• Losses are not deductible
• No reporting requirement

If you're classified as a professional gambler:

• Winnings are taxable as business income
• Losses are deductible as business expenses
• Must report on your tax return
• May be able to claim other business expenses (equipment, subscriptions, travel)

The deductibility of losses is a silver lining for professional gamblers. If you're taxed on winnings, at least you can offset them with losses.

State Taxes on Operators

While players generally don't pay tax on winnings, gambling operators pay substantial taxes. Australian states impose point-of-consumption taxes ranging from 8-20% on net wagering revenue.

These taxes affect players indirectly through:

• Slightly worse odds than offshore books
• Fewer promotional offers
• Higher vig on certain markets

But this is an operator cost, not a direct player tax.

Reporting Requirements

Recreational Gamblers:

• No requirement to report gambling winnings
• No requirement to keep records for tax purposes
• Winnings don't appear on your tax return

Professional Gamblers:

• Must report gambling income on tax return
• Must maintain detailed records of all bets
• May need to register for GST if turnover exceeds thresholds
• Should keep records for 5 years

If you're unsure which category you fall into, the safe approach is to keep good records. It's easier to prove your recreational status with documentation than without.

Interest and Investment Income

Like most countries, Australia taxes interest and investment returns on gambling winnings.

If you win $100,000 at the casino and invest it, the original $100,000 remains tax-free, but any returns (interest, dividends, capital gains) are taxable normally.

This distinction applies regardless of your gambling classification.

Foreign Gambling Winnings

Australian tax residents are generally taxed on worldwide income. However, the same recreational/professional distinction applies to foreign gambling.

Recreational winnings from Las Vegas or Macau would typically be tax-free in Australia, while professional gambling income from anywhere is taxable.

Note that other countries may withhold tax at the source. American casinos, for instance, withhold 30% from Australian winners' prizes above certain thresholds. Australians may be able to reclaim some of this under the Australia-US tax treaty.

Practical Advice

For Recreational Gamblers:

• Enjoy your tax-free winnings
• Keep some records anyway for your own tracking
• Document large wins in case of bank inquiries about fund sources

For Those in the Gray Area:

• Consider whether your activity could be viewed as professional
• Keep detailed records in case the ATO questions your status
• Consult a tax professional if gambling income is significant
• Be consistent in how you treat your gambling

For Professional Gamblers:

• Accept that winnings are taxable
• Keep meticulous records of all bets, wins, and losses
• Track all related expenses (software, data, travel, equipment)
• Consider forming a business structure
• Work with an accountant familiar with gambling taxation

Common Questions

How much can I win before paying tax?

There's no threshold for recreational gamblers. Winnings are tax-free regardless of amount. The question is about how you gamble, not how much.

Do I need to tell the ATO about my winnings?

Recreational gamblers don't need to report gambling winnings. Professional gamblers must include gambling income in their tax return.

What if I win the lottery?

Lottery winnings are tax-free for all players. Nobody gambles professionally on the lottery (the expected value is deeply negative), so this is always recreational.

Can the ATO reclassify me retroactively?

Potentially, yes. If the ATO determines you were operating professionally in past years, they could seek back taxes. The statute of limitations and penalties vary by circumstance.

Should I tell my employer about gambling income?

Generally not relevant. Your employer doesn't need to know about tax-free recreational winnings or taxable professional gambling income (unless it conflicts with employment terms).

Key Takeaways

• Recreational gambling winnings are completely tax-free in Australia
• Professional gamblers are taxed on winnings as business income
• The ATO uses multiple factors to determine if you're gambling professionally
• Volume, regularity, record-keeping, and income dependency all matter
• Recreational losses are not deductible; professional losses are
• There's no dollar threshold that triggers taxation; it's about the nature of your activity
• When in doubt, keep records and consider professional advice

Sources:

• Australian Taxation Office - Gambling
• Casino.org - Gambling Tax Guide
• H&R Block Australia - Gambling Income