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How Will Taxes on Canada Sports Betting Work for Bettors & Operators?

How Will Taxes on Canada Sports Betting Work for Bettors & Operators? article feature image

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When private sportsbooks enter the Ontario online sports betting market this year in Canada’s largest market, it will generate money through tax revenue from operators.

But perhaps the best benefit of winning bets as a Canadian citizen is not having to pay taxes on your earnings. Citizens are only relegated to report their earnings and pay taxes on the interest accrued from any money from winning bets. This only applies to citizens who wager recreationally and not as a full-time occupation.

Private sportsbooks, on the other hand, are required to pay a standard 20% effective tax rate, which is an average rate across Canada. New Jersey is at 13%; Pennsylvania much higher at 36%.

Fortunately, Canada’s tax rate is well below New York’s 51% rate, which can give operators a sigh of relief as they conduct their business in another major market.

Potential Gross Revenue from Online Sports Betting

According to the Vixio Gambling Compliance, Ontario online sports betting can generate almost $989 million in gross revenue in its inaugural year.

That’s a very lofty projection. New Jersey sportsbooks have generated $1.6B in gross revenue since legalizing in 2018, and NJ is now the U.S. leader in sports betting.

Pennsylvania (13M), which is closer in population to Ontario (14.5M), has done $889M in gross revenue by sportsbooks over the last three years.

NJ has generated $202M in tax revenue for the state since legalizing in 2018 with a 13% tax rate for online bets.

The prevalence of offshore betting has been an issue for a long time across Canada, which played a part in the decision to grant private sportsbooks to operate in Ontario.

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