Do you have to pay taxes when gambling with crypto?
There’s no straight ‘yes’ or ‘no’ answer as this depends on the laws related to crypto gambling taxes where you live. There are some very lucky residents of specific countries where neither your fiat nor your crypto gambling winnings are taxed, but these are very few. Starting with the good news first, if you're an official resident of any of the below countries you get a free home run no matter which crypto casino or Bitcoin slots you make your winnings from.
- Austria
- Australia
- Belgium
- Bulgaria
- Czech Republic
- Finland
- Italy
- Malta
- Sweden
If you don’t live in one of the above countries, then you will probably need to pay tax on your crypto winnings. It may be tempting to try and dodge it, but believe me, it’s not worth the risk.
The majority of Bitcoin and alt coin casinos nowadays carry out many compliance and reporting processes, and these include registering player winnings.
Moreover, if the casino where you made a killing is also paying tax in your country of residence, it will be recording your win as a tax loss, so you’ll be busted anyway.
The only instances where this may not be the case is if you’re playing at No-KYC casinos, as these won’t necessarily register your identity upon cashing out your winnings.
How crypto gambling taxes in the USA work
Crypto gambling taxes USA requirements are not specific to the use of digital currencies. Instead, they fall within the definition of ‘other income’, both at a federal and state level, which makes them taxable upon receipt.
Crypto gambling winnings fall within the definition of ‘other income’, both at a federal and state level, which makes them taxable upon receipt.
There is no flat tax rate for your earnings from crypto casinos as the rate depends on your overall gross income. The rates match that for your main income, with the lowest being 10% on income up to $11,000. The more you earn, the higher the bracket with the most expensive one being 37%. If you are a single filer earning income over $578,125, you’ll end up paying this rate in crypto gambling taxes.
Moreover, if you sell or trade your winnings for fiat or another cryptocurrency and you make a profit, you may also need to pay crypto capital gains taxes on the increase in its value, if any. Again, the rate depends on your gross annual income but falls between 15% and 20%. However, if you earn less than $44,625 this rate is zero and you pay nothing.
Here’s how it works:
- You win a 0.50 BTC jackpot from a crypto slot, valued at $20,000
- You report the win as taxable income
- A year later, you sell your 0.50 Bitcoin for $35,000.
- You report $15,000 in long-term capital gains.
If you trade your crypto less than a year after you won the funds, the above rates don’t apply and you’ll be taxed on the profit at the regular income tax rate.
Are there crypto gambling taxes in canada?
If you’re a Canuck player, the answer here is a touch more complicated than it is for other countries. In most cases, winnings made from any form of gambling - whether online or land-based, crypto or fiat - are not considered to be taxable income. You get to keep 100% of what you win, and there are no crypto gambling taxes to pay.
However, this approach has created legal debate, especially as in these past years the rise of online gambling has led to a considerable strengthening of the industry, prompting financial authorities to question whether casino winnings can actually be classified as income and taxed.
In Canada, gambling winnings—whether from crypto or fiat—are generally not considered taxable income, allowing players to keep 100% of their winnings. However, the rise of online gambling has led to legal debate about whether such winnings should be taxable. Most remain non-taxable under Paragraph 40 of the Canadian Income Tax Act, unless linked to a business.
The general rule remains that most casino winnings are not taxable under Paragraph 40 of the Canadian Income Tax Act because they do not derive from a business. However, case law has now clarified that in some cases gambling can constitute a business, with any earnings taxed appropriately.
Somewhat ironically, the main culprit is a man who actually tried to sneak in his poker losses as tax losses in Cohen vs The Queen, in 2011. The Tax Court pretty much laughed his request out of court, but it did debate a specific issue with seriousness - in which cases can casino earnings be considered as earnings from a businessfor the purposes of the Income Tax Act?
The final legal interpretation was that for winnings to be considered a source of income, “it must be apparent from the evidence that the activity in question was carried out in accordance with objective standards of conduct expected of a serious businessperson”. If this condition is satisfied, winnings are taxable and losses can be claimed for tax purposes.
But Canadian players needn’t start panicking and polishing their tax returns as yet. The majority of cases absolutely do not fall within this category, with the accepted interpretation being that this definition only applies to professional poker players and sports bettors who derive regular income from casinos. If you fall within one of these two categories you need to declare the income.
While crypto gambling taxes in Canada are not a thing, if you invest your winnings and derive profit from them, this is indeed taxable and you need to declare it on your T5013 forms.
Taxes on crypto gambling in the United Kingdom
Finally, a straightforward answer with no ifs and buts. There are no taxes on crypto gambling in the UK and you will be allowed to keep all your winnings.
This is true whether you’re an occasional player or a pro gambler and applies to both remote and land-based gambling. This is possible mainly because the British government has put the responsibility of taxation on the operators themselves, which pay a handsome 21% tax on all revenue. This includes crypto casinos that supply their services remotely, and which are required to pay tax on all income derived from players in British territories.
... the British government has put the responsibility of taxation on the operators themselves, which pay a handsome 21% tax on all revenue.
British taxation law makes no distinction between casual and pro players, so even if you consider crypto gambling a source of income, you still won’t get taxed in the UK.
How does the European Union regulate these taxes?
The EU takes a decentralized approach to gambling and allows each member state to decide for itself and there are no regulations that deal directly with fiat or crypto casino taxes. This is why different EU countries have wildly diverging online gambling laws, as well as different regulators. In Sweden, for instance, winnings are not taxed, while in Spain all casino winnings are taxed at 19%.
The EU takes a decentralized approach to gambling and allows each member state to decide for itself and there are no regulations that deal directly with fiat or crypto casino taxes.
Although the EU encourages members to harmonize some aspects of remote gambling regulations, it only does this so as to ensure that players have a level playing field. However, it doesn’t enforce a unified taxation policy.
This applies both to fiat and to crypto gambling taxes, especially in view of the fact that individual countries have also taken different approaches to cryptocurrency laws in general. Some countries, like Malta, were very early adopters, integrating crypto within its infrastructure and creating a regulatory framework early on. Others, like Greece, took a slower approach and are only now starting to discuss a crypto tax framework.
However, crypto gambling taxes across the EU are likely to be more uniform following the implementation of the Markets in Crypto-Assets Regulation (MiCA). The regulation is expected to support market integrity and financial stability by regulating public offers of crypto assets, eventually leading to a structured regime that covers all related taxes.
How to properly report crypto gambling wins/losses
Knowing the rate for your crypto gambling taxes is one thing - actually figuring out how to report and pay them is another.
US players can follow a very simple process during tax reporting season. All your casino winnings must be reported as ‘other income’ on Form 1040. If you need help filling this, the IRS supplies an official guide here. If you’re dealing with a massive win and you’re not too sure about the process, I do recommend getting hold of a tax professional as they can save you a lot of stress and possible fines.
So, let’s say you netted a 0.35BTC win playing Bitcoin slots at Betplay casino. It is 100% your responsibility to make sure that you fulfill your crypto gambling tax obligations, as the casino will only report its own profit. If you land a win bigger than $600, the casino will fill in Form W-2G to ensure that the government has a record of your win, but that’s as far as it goes. The rest is your responsibility.
Form 1040 also allows you to deduct any gambling losses, which is why record-keeping is extremely important. Your winnings go on Line 21, while your losses go on Line 27. If the latter exceeds the former, then you won’t be paying any crypto gambling taxes.
Make sure you follow structured record-keeping so that when the time comes you don’t forget to include these with your tax return.
Incidentally, this process applies state-wide. So the process of dealing with crypto gambling taxes in California is the same as it is in, say, New Jersey or Pennsylvania.
Reporting your crypto gambling taxes for Non-United States players
What about players in other countries? Each country, whether in the EU or not, has its own specific process; however, there is a degree of similarity. Let’s say you’re a player who has just hit it big on Stake.com - how do you properly declare your Stake casino taxes?
For starters, record keeping is an important first step even here. Get in touch with your country’s tax department to find out which additional forms you need to fill - they are always very keen to help. When it’s time to submit your annual tax return, make sure you include these forms.
Let’s use Spain as an example. Spanish players will need to fill in Modelo 100, adding the casino earnings in the section that deals specifically with gambling. You will also find a box where to include gambling losses, which will be deducted from the taxable rate. You can then file your declaration online through the Agencia Tributaria website.
What about other EU countries? The process will be very similar, and you’ll need to download the right form from the official website of your tax authority.
In some countries, if you have full-time employment you won’t need to file a tax return as this is done automatically by the employer. This does not mean that you won’t need to report your winnings. You will still be required to fill in the relevant forms separately, and claiming ignorance is not an excuse if you fail to do so.
For this reason, if you’re a regular player I do urge you to get in touch with your local tax office or to ask a professional to help you. It’s never worth risking ruining your crypto winnings with a fine! In many countries, Bitcoin casinos are part of the legal infrastructure, and carry out their tax reporting duties accordingly, so you will also be expected to do the same.