If you gamble online with Bitcoin or are considering joining one of our recommended crypto casinos and want to know what the tax implications are, check out our beginner's guide to this interesting topic.
According to the American statesman Benjamin Franklin, the only thing anyone can rely on in life is that we will face death and taxes. What Franklin could not have foreseen from his place in history is the invention of the Internet, the evolution of land-based gambling into online gambling, and how cryptocurrencies would impact how taxes are managed.
With the adoption of licensed online gambling worldwide, how various regions handle gambling taxes, and the uncertainty surrounding crypto transactions, we thought it would be helpful to provide a starting point for players looking to navigate this complex topic safely.
Crypto casinos tend to be licensed and under the oversight of regulatory authorities such as the governments of Curacao, Malta, Gibraltar, Kahnawake, and the Isle of Man. This is due to these jurisdictions having a pro-casino framework that either encourages cryptocurrency adoption or, at the very least, does not oppose it.
However, while this means that these operators are not unregulated, many of the most lucrative gambling markets, like the USA and UK, refuse to license popular crypto sites like Stake Casino, 22Bet Casino and Megapari Casino.
The refusal of these specific licenses is not based on any wrongdoing on the part of the operators in question but rather a lack of finality on how the refusing country views the blockchain and digital assets.
A key example of this is the inability of crypto casinos to provide the UK Gambling Commission with data on the source of player funds. The origin of the player's funding is a foundational pillar of the UK's online gambling framework. Given that the core tenets of decentralised cryptocurrencies are privacy and anonymity, the two groups cannot come to an accord.
Here is an overview of how online casino and cryptocurrency taxes are handled in some of the world's most prominent gambling jurisdictions.
According to crypto tax specialists Koinly, the USA has no federal laws about crypto gambling taxes. This is likely due to the enhanced privacy offered by the blockchain making it impossible for the government to track the use and source of your crypto holdings accurately.
However, you can expect to pay Capital Gains Tax when you sell your Bitcoin casino balance for fiat currency and move it into the US banking system. The US applies a dual system that takes into account short-term and long-term gains, which have varying levels that can max out at 37%. For accurate information on the rates that apply to you, please consult a state and federal tax specialist.
The country does apply Income Tax when you earn cryptocurrency for work done, returns on staking, blockchain mining, and when referring new customers to crypto exchanges. As there are state and federal taxes in play, as well as a variety of potential tax breaks (such as gifting allowances and income thresholds) to consider, consulting a specialist is a necessity.
Online gambling winnings are not taxed in the UK. However, the Gambling Commission does not currently license any cryptocurrency or NFT casino game providers. This combination of facts puts taxation on crypto holdings in the same position as discussed above. While you won’t pay taxes on winnings, you will have to pay Capital Gains Tax.
According to the UK tax division, Capital Gains can be triggered when you:
As crypto and fiat income falls into the same value basket, a tax-exempt amount of £3,000 of capital gains applies to any crypto gambling tax calculations.
If you use your Bitcoin or stablecoin holdings for staking or mining or receive them in return for work done, you will have to pay British income tax at the rates applicable to your earnings.
The Great White North is a fantastic place if you love gambling online. Casino winnings are not taxed in Canada, but the country has a well-established crypto Capital Gains and Income taxation framework.
Given that virtual assets like Bitcoin and Ethereum are considered commodities in the country, they do not attract taxes when moving between wallets, being received as a gift, or when you purchase crypto with Canadian dollars.
Trading crypto for another virtual currency, selling your holdings for fiat currency, spending crypto online, and even gifting BTC to someone else will trigger Capital Gains taxes. Luckily, local tax breaks mean only paying tax on 50% of the total Capital Gain amount.
You will have to pay Income Tax if you use your virtual assets to generate earnings through trading, promoting a product, or interactions the government deems "regular and consistent".
If you love to play video slots and other games of chance, winning big in Australia is a double bonus as you do not pay taxes on winnings. Naturally, this will also apply to any winnings from a crypto casino.
However, Australia has an established crypto tax regime, as digital assets are legally considered property and taxed accordingly. All approved exchanges are listed as financial service providers (FSP) and must assist the Australian Transaction Reports and Analysis Centre (AUSTRAC) in ensuring all transactions remain above board.
The Australian Taxation Office uses this relationship to monitor and calculate whether you will pay Capital Gains Tax or Income Tax. The state also has different tax levels for investors versus traders.
If we did not cover your region above, you can follow these three simple steps to quickly determine what you need to pay to stay clear of your local tax man:
While we know the above is far from an exhaustive list of countries, we hope our beginner's guide helps you understand what to look for in terms of understanding the limits and restrictions of gambling taxation and crypto asset taxation.
Whether capital gains or income tax applies to your crypto activity, with so many transactions across different wallets, blockchains and exchanges, finding accurate valuations and understanding your tax liability is difficult. With a crypto tax calculator like Recap, users can easily track all their crypto assets in one place and automatically generate a HMRC compliant crypto tax report.
Now that you know how to safely navigate your local gambling tax requirements, there is nothing holding you back from enjoying the best online casino entertainment, such as the Aviator Crash Game, with your favourite cryptocurrency.
Please peruse our selection of the best crypto casinos and use our handy regional and feature filters to find the site that perfectly meets your online preferences.
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