What are ‘Gross Winnings’?
Gross winnings are the total amount the gambler wins before any deductions. How much taxes a gambler pays on his gross winnings, and whether he has to pay taxes at all, depends on what country he lives in. In America, professional gamblers pay tax on winnings, but the tax they pay is the same on a $2,000 win as it is on a $20,000 win. One-off gamblers usually don’t have to pay any tax, though that depends on various factors listed in the section below. In the UK, the government charges the bookmaker or casino 15% on their gross profit. However, as industry experts state, the customer still pays the tax indirectly through higher prices.
‘Gross Winnings’ Explained
In the USA gamblers have to declare their gross winnings if they earn $600 and over at a horse track, $1,200 and over at a slot machine or bingo game, $1,500 and over in keno winnings, or $5,000 and over in poker tournaments. TurboTax state that many casinos will deduct the taxes from a gambler’s gross winnings before they pay them. Any gross winnings in a casino in the USA is subject to tax, but for table games such as Blackjack, craps and roulette, gamblers don’t have to fill out a W2-G form.
In terms of state taxes, it depends on which state the gambler lives in. Gamblers living in Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming are all exempt from having to pay taxes on their gross winnings. Gambling losses are deductible, but it all depends on how much the gambler wins. If he earns $5,000 in gross winnings but $7,000 in losses, $5,000 is subject to deduction before taking his net winnings. However, as TurboTax states: “You need to first owe tax on winnings before a loss deduction is available.”
Therefore, deductions only give the money back that a gambler would have paid on taxes anyway.
The UK abolished betting tax for punters in 2001. At the time, the government were concerned that they were losing revenue to offshore bookmakers in the Isle of Man and Gibraltar, so they decided to charge the bookmakers 15% on their gross profit instead. Many believe this decision resulted in UK bookmakers becoming a lot more competitive.