In 2021, the federal government gave provinces the green light to legalize online gambling without clarifying one basic question: when do your winnings become taxable? Five years later, the answer is still being decided case-by-case in court, as millions of Canadians now bet regularly online.
Ontario was the first province to allow DraftKings, Fanduel, BetMGM, and other big gambling companies to set up shop in 2022. That created a $1.2 billion industry overnight: in the first year, 1.6 million accounts wagered $35.5 billion. It also had dire consequences: calls to help lines tripled, gambling-related bankruptcies quadrupled, and the number of Ontarians struggling with problem gambling jumped to 11% (up from just 1% in 2018).
Meanwhile, courts were making another mess: deciding that some gambling winnings are taxable, while previous cases had already ruled the opposite, creating a contradiction for gamblers and legal experts alike. Parliament legalized gambling without settling on the tax rules, and it needs to fix that before more Canadians stumble into the same confusion.
If the court decides you're using gambling as a business, you could be on the hook to pay taxes on the income.
PexelsTake the case of Fournier-Giguère et al. v. Canada, which dealt with three professional poker players in Quebec and came to a close in 2025. The trio had done well for themselves, with each winning hundreds of thousands of dollars in poker tournaments annually – one even managed to score nearly $2 million in a single year.
So it came as an unwelcome surprise when the taxman came for a significant chunk of their cash. Traditionally, a gambler’s winnings weren’t considered taxable at all; for one thing, gambling is generally considered to be a hobby, and for another, gamblers tend to lose rather than win. The three poker players fought back, arguing that the tax code specifically exempted money gained or lost from “a chance to win a prize or bet.” In the end, the court disagreed: their gambling, it said, was so professional that it constituted a business, and business income is taxable. Pay up, said The Man.
Confusingly, just three years earlier, the courts had decided not to tax a different poker player. In Duhamel C. Canada, Jonathan Duhamel won nearly $9 million USD at the World Series of Poker Main Event in Texas in 2010, and took home a further $490,000 USD over the next two years from other competitions. The CRA tried to come for him, too, but in 2022, the Tax Court of Canada ruled his winnings were not taxable.
So, when do gambling winnings become taxable? Kevin Persaud is a tax lawyer from Toronto whose clients have included people with large gambling incomes, and he says the answer is murky.
“There’s no legal definition of a professional gambler,” says Persaud. Instead, gambling winnings fall into the catch-all category of a “source of income” under tax law, which captures any income or loss that happens outside of traditional employment. Because there’s no law to determine what is and what is not a source of income, it’s fallen to the courts to set precedents over the years, one case at a time. As a result, says Persaud, “It’s very difficult for laypeople to determine why the court goes one way or another in similar-looking cases. And that’s true for lawyers as well.”
There's no dollar threshold, no percentage of total income, and no clear line; you won't know you're on the wrong side of it until the CRA decides to come after you. The one factor that’s always applied, however, is whether a person can make a living off the activity in question. “Do you rely solely or almost exclusively on your gambling winnings to pay your bills? If so, there’s a decent chance your winnings are taxable,” he says. Those aren’t the only factors: the courts also consider a gambler’s history of winnings, the time spent on the activity, risk management strategies, and training regime. But the ability to subsist on the income is such an overriding factor, says Persaud, that the other questions are “a bit of a smokescreen.”
This explains the difference between the Fournier-Giguère cases and the Duhamel one. Duhamel was “something of a one-hit wonder,” says Persaud: he won big in the World Series, but never replicated the feat. Instead, he spun off his success into a series of sponsorship and promotional deals, which earned him traditional (and taxable!) employment income. “Like the Hawk Tuah girl,” says Persaud.
Because Duhamel’s more traditional jobs were his real source of income, the courts reasoned, his poker windfalls didn’t count as business income, and therefore were exempt from tax. The Fournier-Giguère guys, on the other hand, were much more serious. All three lived mainly off their poker earnings and treated it like a business – and the CRA noticed.
These might seem like fringe cases, but as online gambling explodes in Ontario and Alberta looks to follow its lead, they matter now more than ever. The federal government authorized online gambling, then left the provinces to deal with the consequences. Meanwhile, tax courts are still working out the rules for traditional poker games. If this is how slowly the system responds to in-person poker, what happens when the CRA catches up to the millions betting online?
Whether the CRA considers your winnings taxable isn't a roll of the dice, but there's no dollar threshold, no percentage, and no clear line.
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The new forms of gambling could cause even more tax problems than their predecessors. Winnings from legal gambling happen in full view of the government, putting far more cash in front of the CRA than under-the-table poker tournaments ever did.
Take the case of Joe Buck, a 35-year-old poker player living in Alberta. Buck (who spoke under a pseudonym to talk about his tax matters freely) started playing poker professionally at age 18 and went full-time seven years ago. In those seven years, he’s come away with a net of $700,000 in tournament winnings and some $1.4 million in under-the-table cash games. With no need for a day job, Buck is, very technically, unemployed – and that’s exactly what he puts on his taxes, recording $0 in income year over year. The way he looks at it, he’s just an unemployed guy with a fun hobby. “Most poker players lose,” he says. “I just happen to be lucky.”
Buck has become an expert at evading taxes. Much of his online winnings are paid out in cryptocurrency, which is hard to trace, and he operates in cash as much as possible, keeping his bank deposits under $10,000 to avoid scrutiny by the tax authorities. If it ever came to buying a house or a car, he says, he’d do it under a friend’s name.
He claims these strategies are the norm for many professional gamblers. If he's right, then much of the cash tied up in Canada’s existing pro gambling scene has been flying under the radar for years. The Fournier-Giguère and Duhamel cases targeted the very public tournament winnings of just a handful of top players, so the CRA was only chipping away at the iceberg. With legal gambling now putting everything out in the open, it could break off a much bigger chunk.
With all this potential tax exposure, having such unclear tax rules isn't ideal, to put it mildly. But the courts can't – and shouldn't – solve this problem. They tend to avoid creating sweeping policy changes – after all, that should be the job for lawmakers. When it comes to cases like Duhamel, says Persaud, the courts had to be very careful about how much their decision would ask of the tax system. Declaring Duhamel’s gambling taxable would have demanded the CRA monitor every loss he took for the rest of his poker career and somehow apply them to his tax return. Online gambling only makes this more complicated: Persaud shudders to think of a scenario where both the Crown and his clients have to enlist experts to testify on the probability odds of various gambling games.
Parliament opened the door to online gambling in 2021, creating a billion-dollar industry and millions of new bettors, without addressing any of the tax questions that come along with it. Now courts are working through contradictory precedents and apparently, nobody knows when or if winnings become taxable. Canada needs clear tax rules about gambling earnings, before more gamblers end up in court and taxpayers foot the bill for years of legal battles. With billions of dollars being wagered across Canada, this isn't the kind of thing that should be left to chance.
