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Proceeds from online gambling are generally not liable to tax in Canada, according to the Canadian Revenue Agency (CRA), which has always held that residents of Canada do not need to declare recreational gambling winnings on their tax returns, regardless of the medium.
However, there have been exceptional cases where courts have held gambling winnings to be taxable, mostly because they resulted from gambling activities that demonstrate the characteristics of a business.
This guide will address common questions about tax liability on gambling winnings in Alberta, the rare exception of professional gambling, and how the CRA determines who qualifies as a professional gambler.
Are Your Gambling Winnings Taxable in Alberta?
In Canada, gambling winnings are usually tax-free. It doesn’t matter if you win at a casino, sportsbook, or online — even if you’re in Alberta, you typically don’t need to report those winnings or pay tax on them, according to CRA guidelines.
Profits from operating an Alberta online casino or sportsbook, whether legal or otherwise, would be subject to tax, which is typically collected and administered by the provincial government. However, individual gambling winnings are exempt, except when considered a business, which the CRA admits is only in some exceptional cases.
How the Situation Changes for Professional Gamblers in Alberta
According to the CRA, individuals may be liable to tax on gambling winnings if their gambling activities demonstrate some degree of organization, rely on a physical skill or inside information, and constitute a primary source of income.
The agency classifies these activities as professional gambling, which would be taxed as any other business activity in Canada. Some specific examples cited in the Income Tax Folio S3-F9-C1 include cases such as Luprypa v. The Queen, where a sober pool player who would challenge tipsy pool players to games of pool was ruled to be subject to income tax on his winnings.
However, the bar for tax liability on gambling winnings is very high in Alberta and the rest of Canada, and unless gambling is your main source of income, you likely don’t have to worry about paying tax on your gambling winnings.
Can Your Gambling Winnings Become Taxable in Alberta?
It’s worth noting, however, that winnings from iGaming and other gambling activities may be subject to secondary taxation if they’re used for activities that generate taxable income.
For example, say an Albertan won $100,000 from playing online casino games at PlayAlberta and proceeded to invest the money in stocks. Any dividends from said stocks will be subject to tax based on CRA’s guidelines, notwithstanding the tax-free status of the underlying gambling winnings.
In short, using your gambling winnings for secondary income-generating activities may make the profit, dividends, or interests liable to tax, but your original gambling winnings always remain tax-free.
What This Means for Gamblers in Alberta
The implication is simple: You don’t have to worry about taxes when gambling in Alberta, and this applies regardless of the medium. Even the ongoing shift to a regulated iGaming market will not affect the tax-free status of any gambling winnings. So Albertans playing on licensed iGaming sites after the official launch can collect their full rewards without worrying about filing federal or provincial taxes.
The same rule applies across all Canadian provinces — you generally won’t owe tax on gambling winnings, even if you’re just visiting and stop to play. But it’s a different story abroad. In some countries, like the United States, gambling taxes are stricter, so you may have to pay tax on any winnings from a casino there.
