What is ‘Tax’
Tax is a payment due from an individual or business to a state or nation’s government. Taxes are usually set by law, and they are imposed so that national economies can generate funding to spend on infrastructure, services and other operating costs. Casinos and gambling services pay tax on the revenue they bring in, just as any other business would. In many nations, gamblers also pay tax on their income from gambling.
A ‘tax’ is a levy or duty which is imposed on any commercial entity or individual, requiring them to pay a portion of their income to the government (or to a retailer or service). Taxes are usually used to fund national services such as transport infrastructure, healthcare, education, welfare and other costs. Some taxes are only applied in specific circumstances, such as when profit exceeds a certain level or when a certain type of goods or services are being traded. Other taxes are applied as a standard to all relevant parties. Some taxes are also used to control potentially harmful industries by deterring certain kinds of trade, or to fund the additional regulation and management an industry might require. Gambling falls into this latter category.
In gambling, tax is applied to casinos, bookmakers and online casino services on the profit they make from the player, as well as on their other forms of income. Casino profits include game bets held, but they also include bar and restaurant revenues, ticket prices for events, and other entertainment related payments. Tax is usually only paid on winnings after expenses are paid – venues need to pay staff and running costs, while websites must pay for hosting and security, which reduces overall profit. Most taxes are calculated once these costs are met.
In some nations, including the USA, gamblers are also liable for tax. Players who make a profit from gambling – that is, players who have a positive long term balance with more wins than losses – must declare this money as income, and pay tax on it just as they would any employment earnings. In the UK, gambling wins are tax-exempt: players keep every penny and do not need to declare it to the tax authorities.