Should You Declare Your Winnings?

What they don't know won't hurt them
Of all the gray areas that exist in the world of gambling, the grayest of them all is whether winners declare their winnings to the tax authorities. The majority of people know they should, but an equally large majority is unlikely ever to do so. The prevailing attitude among winners is, what they (the tax authorities) don't know, won't hurt them...

Source taxation
Governments get around the honesty issue by taxing many gambling activities at source. Winnings accrued from national lotteries or at the dog or horse track are provided after tax amounts have already been deducted. However, there are many more tax activities including online and land-based casinos where winnings are left to the discretion and honesty of the winners.

A good reason to declare your winnings
One good reason to declare your winnings, apart from the obvious one of being an honest member of society, is that gambling losses can also be claimed as an expense against tax. In effect, those who lose on the gambling table can offset those losses against income earned from other sources, including that from gambling. This "honesty dividend" is probably one of the strongest arguments for declaring gambling income and losses in your next tax return.