The Australian Taxation Office lists betting and gambling wins among amounts that are not assessable income, unless the person operates a betting or gambling business. The test for a business comes from Federal Court decisions summarised in Taxation Ruling IT 2655, issued on 17 October 1991, which notes that no Australian case has held a mere punter's winnings to be assessable.
- ATO: betting and gambling wins are not assessable unless you operate a betting or gambling business.
- IT 2655 (17 October 1991) sets out the business criteria from Federal Court cases, including Evans v FC of T, 89 ATC 4540.
- If gambling is not a business, losses are not deductible either; the treatment cuts both ways.
- Crypto won gets a cost base equal to its market value at the time of the win; a later sale can trigger capital gains tax.
On this page
The general rule
Australia does not tax a recreational gambler's winnings. The ATO's business guidance on what income to exclude lists betting and gambling wins among amounts that are not assessable, with the qualification: unless you operate a betting or gambling business.
The reasoning is that a win from gambling is, for most people, a windfall produced by chance rather than income earned from an activity carried on for profit. The same logic runs in reverse: if winnings are outside the tax system, losses are too. A person who is not in a gambling business cannot deduct losses against a salary or any other income.
Nothing in this rule depends on where the bet was placed. The ATO material discussed here does not distinguish between a licensed Australian bookmaker and an offshore casino. That is a separate question from legality: under the Interactive Gambling Act 2001 it is an offence to offer online casino games to people in Australia, though not an offence to play, and players at offshore sites have no Australian regulator to turn to if a payout is refused. See the overview of Australian gambling law.
The carrying-on-a-business test
Whether someone carries on a business of gambling is a question of fact. Taxation Ruling IT 2655, titled Income tax: betting and gambling – whether taxpayer carrying on business of betting or gambling, collects the principal criteria the Federal Court has applied. They include:
- whether the betting is conducted in a systematic, organised and businesslike way;
- the scale of the activity, including the volume and size of the bets;
- whether the gambling is connected with other businesslike activity, such as breeding or training racehorses;
- whether the person's main purpose is profit or pleasure.
The ruling then makes two points that shape almost every case. First, it accepts that a professional punter could in principle be carrying on a business, but says that the intrusion of chance into the activity as a predominant ingredient will generally preclude that finding. Second, it records that there is no Australian case in which the winnings of a mere punter have been held to be assessable. Each case, the ruling stresses, depends on its own facts.
The cases behind the ruling
IT 2655 draws on Federal Court decisions about heavy punters, principally Evans, Brajkovich and Babka. In each, the taxpayer bet large sums and the court still found no business.
| Case | What the court looked at | Outcome |
|---|---|---|
| Evans v FC of T, 89 ATC 4540; (1989) 20 ATR 922 (Hill J) | No records, no staff, no computer or tipping services, little study of form; preference for TAB and totalisator bets and exotic bets such as quinellas and trifectas | No business. Hill J held that volume and size of bets alone were not decisive |
| Brajkovich v FC of T | Whether the betting had the system and organisation of a business | No business; the missing element was system and organisation |
| Babka v FC of T | Facts did not show the system and organisation of a business | No business, although the court again assumed punting might in principle be one |
The consistent thread is that volume and size of bets are relevant but not decisive. A person can turn over very large amounts and still be a punter in the eyes of the law, because what is missing is the structure that would make the activity a business rather than a pastime. Full citations for Brajkovich and Babka were not confirmed from a primary source for this article and are therefore given by name only.
A worked example
Three hypothetical people, with round illustrative numbers. None of this is tax advice; it applies the published criteria to simple facts.
| Person | Facts | Likely treatment under the published criteria |
|---|---|---|
| Recreational player | Plays online pokies on weekends, nets a $15,000 win over a year, no records | Not assessable; losses in other years not deductible |
| Heavy punter | Turns over $400,000 a year on races, keeps informal notes, works full time elsewhere | Very likely not a business on the Evans and Brajkovich reasoning; winnings not assessable |
| Organised betting operation | Runs a syndicate with staff, models, written records and a profit plan, linked to a horse-training business | Could be a business; net profits assessable and losses deductible |
The point of the third row is that the business finding works in both directions. A person found to be in business pays tax on net profits, but can also deduct losses and expenses. IT 2655 ties the deduction of losses to the general deduction provision of the 1936 Act, section 51(1), which applies only where the losses are incurred in carrying on a business. Without a business, there is nothing to attach the deduction to. That is one reason the issue tends to be argued by taxpayers trying to deduct losses as often as by the ATO trying to tax gains.
Casino games versus betting
The reported cases are about betting on races, where skill in assessing form and price is at least arguable. Casino games such as pokies and roulette are set up with a fixed house edge, so the element of chance that IT 2655 treats as generally precluding a business finding is stronger still. That is why the published guidance gives no realistic route to treating ordinary casino play, online or in a venue, as a business. It is also why expected-value maths matters more than tax for a player: on a game with a house edge, the expected result over time is a loss. The payout rate page explains how return-to-player figures are expressed.
The crypto angle
Crypto adds a second layer, because the asset itself can be subject to capital gains tax even when the gambling result is not. The ATO's page on crypto asset prizes and gambling winnings sets out three rules.
- Capital gains and losses made directly from gambling winnings or losses, or from a game or competition with prizes, are not included for CGT purposes.
- Crypto won as a prize or gambling winning has a cost base equal to its market value at the time it was won.
- If the crypto is then kept as an investment, selling or otherwise disposing of it later can produce a capital gain or loss.
The ATO's own example: a person wins crypto worth $20,000, sells it two years later for $30,000 and makes a $10,000 capital gain. Because the asset was held for at least 12 months, the CGT discount applies and the net gain in the example falls to $5,000.
The cost-base rule is what stops a crypto win being tax-free forever. The win itself is excluded, but from the moment it lands in a wallet the coins are an ordinary asset, and any movement in their value from then on is measured for CGT. Someone who wins crypto and holds it through a market fall can equally make a capital loss on a later sale, measured against the market value on the day of the win.
Disposals and the personal-use exception
The ATO lists the events that count as disposing of crypto: selling it, gifting it, trading or swapping it for another crypto asset, converting it to Australian dollars or another fiat currency, and using it to obtain goods or services. Each is a CGT event. There is a personal-use asset exception, but the ATO limits it to crypto acquired and held for a short time in order to buy items for personal use or consumption. Crypto held as an investment, or kept to profit from price changes, does not qualify, so most holdings that later end up at a casino are unlikely to fit the exception.
The other direction matters too. The ATO's guidance on crypto asset transactions treats using crypto to obtain goods or services as a disposal. The ATO pages checked for this article do not specifically address depositing crypto with a casino, but a holder who sends crypto held as an investment to any third party should expect the transfer to be analysed as a disposal, with the gain or loss measured against what it originally cost. A simple illustration: Bitcoin bought for $2,000 that is worth $5,000 when it is sent as a deposit may carry a $3,000 capital gain at that moment, regardless of what then happens at the tables. Background on crypto deposits is on the Bitcoin payments page.
Record keeping and where to check
Even when winnings are not taxable, records help. Large unexplained deposits into a bank account can prompt questions from a bank or the ATO, and a clear trail of casino withdrawals answers them. For crypto, the cost base of every coin and the date and value of every disposal are needed whether or not gambling is involved. The ATO publishes the rulings and guidance cited here on its legal database; anyone with large or regular gambling activity, or a betting operation that might look like a business, should get advice from a registered tax agent. If gambling is causing financial stress, Gambling Help Online is available on 1800 858 858.
Questions readers ask
Do I pay tax on casino or pokies winnings in Australia?
Generally no. The ATO lists betting and gambling wins as not assessable unless you operate a betting or gambling business.
Can a professional gambler be taxed?
Yes, if the gambling amounts to a business. IT 2655 says chance as a predominant ingredient generally rules that out, and notes no Australian case has held a mere punter's winnings assessable.
Can I claim gambling losses as a tax deduction?
Only if you are carrying on a gambling business. For recreational gamblers, losses are outside the tax system just as winnings are.
Is crypto won at a casino taxed?
The win itself is not, but the ATO gives the crypto a cost base equal to its market value when won, so selling it later can produce a capital gain or loss.
Does it matter that the casino is offshore?
The ATO guidance on winnings does not distinguish by operator location. Offshore online casinos are separately prohibited from serving Australians under the Interactive Gambling Act 2001, which leaves players without a local regulator.
Sources
Every figure and date in this article comes from the documents below; we re-check them when a source changes.
- ATO — What to exclude from your business's assessable income
- ATO — Taxation Ruling IT 2655: betting and gambling, whether taxpayer carrying on business
- AustLII — IT 2655 [1991] ATOITR IT2655 (17 October 1991)
- ATO — Crypto asset prizes and gambling winnings
- ATO — Crypto asset transactions
- Interactive Gambling Act 2001 (Federal Register of Legislation)
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