Are You a Professional? Rules for Gambling Tax in Australia

Gambling is a beloved activity in Australia, with Aussies losing more on average than in any other country globally. Fortunately, casual gamblers in Australia don’t have to worry about tax on their occasional winnings.

However, professional gamblers are required to pay tax on their earnings. Defining who qualifies as a professional gambler has been a challenge for Australian courts. For most individuals, you can grow your bankroll without the taxman intervening.

Who Is a Professional Gambler in Australia?

Understanding who qualifies as a professional gambler is crucial, as professionals are subject to taxation on their winnings. Australian courts haven’t provided a clear, comprehensive definition, leaving some casual punters potentially classified as professionals depending on their specific circumstances. 

One major criterion for being deemed a professional gambler is whether the individual is operating a gambling business. This fits with the notion that a "professional" engages in activities with a business-like approach. 

To assess if you might be considered a professional gambler, ask yourself these three critical questions: 

1. Is the gambling activity conducted in a business-like manner? 

2. Does the individual possess specialised knowledge about gambling? 

3. What scale is the gambling operation? 

The responses to these questions, when considered together, will help determine if you are liable to pay tax on your gambling winnings.

Should You Pay Tax on Your Gambling Winnings? 

Gambling operators and companies, including those licensed under the Interactive Gambling Act 2001, are required to pay tax on their revenues. However, for most individual punters, occasional gambling winnings are not subject to tax. 

If you’re an infrequent bettor, such as someone who places an occasional bet on horse racing or football, the likelihood of facing tax issues is minimal. Nevertheless, there are specific scenarios that could put you at risk. 

Firstly, if you are betting on an area where you have inside or specialised knowledge, it’s wise to be cautious. For example, if you work in horse breeding or training, betting on races could lead to your activities being classified as professional. In such cases, you may need to pay tax on your winnings to avoid complications. 

Secondly, placing large bets regularly could attract attention. While small, occasional bets are less likely to raise concerns, consistently wagering large amounts might draw the tax authority’s scrutiny. This is particularly relevant for those who invest significant time in developing betting models or conducting detailed research, as substantial bets could indicate a professional gambling operation.