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Will there be taxes on online sports betting in Ontario?

The bill to remove the federal prohibition on single-game betting throughout Canada was lifted back in June 2021, allowing Ontario to regulate single-game sports betting through the Government-run ProLine+. 

sport betting taxes

By August, the Ontario Lottery and Gaming Corporation launched its sports betting product.

However, there are many questions regarding the Ontario sports betting scene that are still left unanswered. Thankfully, “Will there be taxes on online sports betting in Ontario?” is not one of them.

Recreational sports betting vs professional sports betting

At the time of writing, the Canada Revenue Agency (CRA) states that any recreational lottery, horse racing, online casino, or sports betting winnings are not taxable. Recreational gambling cannot be considered a legitimate source of income, as the money did not come from employment, property, or another viable option. However, with that being said, if any of your sports betting winnings earn interest, then you must declare it on your T5 form.

Things are slightly different for those who consider themselves full-time sports gamblers. Regardless of whether you choose to place your sports bets at a retail sportsbook or at one of the new online sportsbooks set to hit the market, if you are a professional sports bettor, you will be required to pay tax. Professional gamblers are deemed to operate their own freelance business, which is taxable across Ontario.

If you are considering taking a trip to the US, and making use of one of the many legal online sportsbooks available, please note that you will have to pay taxes on any winnings that surpass the $1,200 threshold. However, Canadians working in the USA must bear in mind that they can offset any sports betting losses from their tax return and receive a refund. This is handy to know, especially when we consider that you will be required to pay 30% tax on any eligible winning amount.

Unlike the US, there is no set tax rate on your sports betting earnings. Instead, taxes will be determined on a case-by-case basis. To put things simply, professional gamblers are required to find their total winnings, offset their losses, and combine their total with other sources of income before finding their taxation bracket. Of course, if you have any further questions regarding your profits and losses, we would always advise discussing the above with a registered accountant.

Tax revenue from online operators

One of the driving forces behind the passing of C-218 was the high usage of offshore sports betting platforms across Canada. Since the launch of the Ontario Lottery and Gaming Corporation sports betting product, and the emergence of iGaming Ontario, it has been predicted that private sportsbooks will generate almost $777 million in gross revenue that can be used towards positively enhancing Ontario citizens’ lives.

The new subsidiary of the Alcohol and Gaming Commission of Ontario (AGCO), iGaming Ontario, is set to manage all new forms of sports betting. Many private sportsbooks have already been linked to Ontario’s market, including DraftKings, FanDuel. BetMGM, and more. The market itself was initially planned to go live back in December 2021; however, due to the terms and conditions still being ironed out, this was set back, and is now due to go live in April 2022. Although terms are still yet to be confirmed, we do know that all private sportsbooks will be required to pay a standard 20% effective tax rate, contributing tremendously to Ontario’s revenue figures.

Should YOU be paying taxes?

With your newfound knowledge, it’s now time to consider whether you would consider yourself a recreational sports bettor or a certified professional. If it’s the latter, make sure you keep track of your winnings and losses, take note of the requirements should you travel or work in the US, and seek advice from a qualified professional if needed.

It’s an extremely exciting time for you as a sports bettor in Ontario. PointsBet has already entered the online market, with many other top competitors banging on Ontario’s virtual doors. With so many questions left yet to be answered, you’ll want to find yourself a reputable spot to keep up-to-date with all the latest news surrounding Ontario’s sports betting scene. If there’s one name you can trust, it’s GamblingGuy.com – we look forward to seeing you again soon.

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