Tax

Gambling Winnings and Tax in Australia: What the ATO Says

Last updated 23 October 2026 · by the Aussie Top Casinos editors

For most Australians a casino win is not taxed. The ATO ruling, the professional gambler test, offshore sites and the CGT catch with crypto.

Australian Taxation Office building and car park in Canberra — Photo: Nick-D / Wikimedia Commons, CC BY-SA 4.0

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For most Australians, a win at the pokies, the races or an online casino is not taxed. That position does not come from a special exemption. It comes from how the Australian Taxation Office decides what counts as income, and it has a clear exception for people whose gambling is a business. This guide sets out the ATO's published position, the factors used to tell a punter from a professional, how offshore casinos fit in, and the one area where crypto changes the picture.

The ATO's position in plain terms

Income tax applies to income: wages, business profits, interest and similar receipts. Winnings from gambling by a recreational player are treated as windfalls rather than income, so they are generally not assessable and do not go in a tax return. The same logic applies to losses: outside a business, there is no income for them to be deducted against.

The ATO's long-standing ruling on the subject is Taxation Ruling IT 2655, which deals with whether a taxpayer is carrying on a business of betting or gambling. It reviews the court cases and accepts that where no business exists, winnings were held not to be assessable. The ruling's starting point is that a business of gambling is the exception: "The Commissioner accepts that it is possible for a mere punter to be carrying on a business of betting or gambling but considers that it will be rare..."

The ATO's list of amounts you do not include as income also names prizes such as lotto and raffle prizes and game-show winnings. It is a general list, so for gambling the ruling above is the more specific reference.

The professional gambler test

IT 2655 draws on several court decisions, including Evans, Babka and Brajkovich, and sets out the principal criteria the ATO weighs when deciding whether gambling has become a business. No single factor decides it; the overall picture does.

Factor in IT 2655	What points towards a business	What points towards a punter
System and organisation	Systematic, organised and businesslike methods, records, a defined approach	Ad hoc play, no records
Volume and size	Large and regular stakes and turnover	Occasional or modest betting
Link to other activities	Connection with related businesslike activities	Gambling separate from any business
Profit or pleasure	Motive is profit	Motive is entertainment
Skill or chance	Outcomes driven by skill and judgement	Outcomes driven largely by chance

The chance factor matters for casino players. Pokies and most casino games are designed around a fixed house edge, so long-run results are governed by chance rather than skill. That makes it very hard for casino play to fit the business pattern, however much is staked. Heavy play alone does not create a business; in the cases discussed in the ruling, large and frequent betting was not enough on its own.

If it is a business

Where gambling is found to be a business, the profits become assessable income and the related losses and expenses can generally be claimed. That is why a taxpayer sometimes argues that their gambling is a business: in a losing year it would create deductions. The ruling's view that such cases will be rare applies in both directions.

Does it matter that the casino is offshore?

The ATO's position turns on the nature of your activity, not on where the operator is based. A recreational player's winnings are windfalls whether they come from a local venue or a website licensed overseas. Nothing in IT 2655 makes the location of the bookmaker or casino the test.

Tax is a separate question from legality, though. The Interactive Gambling Act makes it illegal for operators to offer online casino games to people in Australia, and ACMA blocks and pursues those services. The law targets providers rather than players, but it means there is no Australian licensing body to help if an offshore site withholds a payout. Our guides to legal online casinos and online gambling in Australia explain the framework.

Other countries' rules may apply if you are not an Australian resident for tax purposes, or if the site deducts tax in its own jurisdiction. If either applies, get advice for your situation.

Crypto winnings and capital gains tax

Crypto adds a second step. The ATO's page on crypto asset prizes and gambling winnings says that, for CGT purposes, you do not include capital gains and capital losses you make directly from winnings or losses from gambling. So the win itself is not taxed.

What happens next can be. The same page explains that if you later dispose of crypto you won, that disposal may be subject to CGT, and the cost base is the market value of the crypto at the time you won it.

The ATO's worked example

The ATO gives this example. Anwar wins crypto worth A$20,000. Two years later he sells it for A$30,000. His capital gain is A$10,000, the difference between the sale price and the value when he won. Because he held it for two years, the CGT discount applies, halving the gain to A$5,000, which is the amount included in his return.

Step	Amount
Market value when won (cost base)	A$20,000
Sale price two years later	A$30,000
Capital gain	A$10,000
Net gain after the CGT discount	A$5,000

The practical lesson: if you play at a crypto casino or a bitcoin casino, record the A$ value of each win on the day it lands. Without that figure you cannot work out the cost base later. The win is free of tax; the price movement after it is not.

Key point: for a recreational player, gambling winnings are not income and do not go in a tax return, and losses are not deductible. A business of gambling is taxed, but IT 2655 says that will be rare, and chance-based casino games make it harder still. Crypto winnings are not taxed when won, but selling or swapping them later can trigger CGT measured from their value on the day you won.

Common situations, applied to the ATO position

The scenarios below are general examples of how the published position applies. They are not rulings, and edge cases need professional advice.

A one-off large win. A single A$50,000 pokie jackpot, as an example, does not turn a recreational player into a business. Size alone is one factor among several in IT 2655, and a single event is not systematic or organised activity.
Regular weekly play. Playing every week out of habit is still recreational if the motive is entertainment and the results depend on chance. Frequency does not create a business without the businesslike features listed in the ruling.
A won balance kept as crypto. The win is not taxed. If the coin's price rises and you later swap it for another coin or sell it for dollars, that disposal is the CGT event, measured from the value on the day you won, following the ATO's crypto winnings guidance.
Interest or rewards on gambling funds. Income from other sources, such as interest earned on money you hold, is assessed under the ordinary rules for that income. It does not become tax-free because the money came from gambling.

Where your circumstances look more like the business side of the table, with systems, records, large regular stakes and a profit motive, the analysis can change. The ruling treats that as unusual, but it is the point at which a registered tax agent earns their fee.

Records worth keeping anyway

Deposits and withdrawals. Bank and e-wallet statements show where money came from if a large balance is ever queried.
Crypto values on the day of each win. These set the cost base for any later CGT event.
Casino transaction history. Download it periodically; offshore sites close and accounts can be suspended.
A note of your stakes and results. Useful for budgeting, and it shows that play is recreational if that is ever questioned.

This page summarises the ATO's published material. It is general information, not tax advice; for anything unusual, such as very large wins, frequent crypto disposals or gambling alongside a related business, talk to a registered tax agent. If gambling has stopped being entertainment, our responsible gambling page lists free support services.

FAQ

Do I pay tax on casino winnings in Australia?

Generally no, if you gamble recreationally. Under the ATO ruling IT 2655, winnings are taxed only where gambling amounts to a business, which the ATO says will be rare.

Does it matter if the casino is offshore?

For tax, the test is the nature of your activity, not where the operator is based. Offshore online casinos are still illegal to offer to Australians, which is a separate issue.

Are crypto gambling winnings taxed?

The win itself is not a capital gain. If you later sell or swap the crypto, CGT may apply, with the cost base set at its market value when you won it.