Is gambling income taxable in Australia? The answer depends on whether you are a professional gambler. Here is how the ATO decides, and what can go wrong.
It is a widely held belief in Australia that gambling winnings are not taxable. For most recreational gamblers, this is correct. But for those who gamble regularly, systematically, and with a degree of skill, particularly poker players, the position is more complex, and the ATO has demonstrated a willingness to assess gambling winnings as assessable business income.
This article explores when and why gambling income can become taxable, how the ATO approaches this question, and what happened in a real case that our office successfully defended.
Under Australian tax law, receipts from gambling are generally not treated as assessable income. This is because gains from gambling are considered windfall gains, the product of chance rather than the exercise of a business skill, and windfalls are not ordinarily included in assessable income.
The general rule therefore is that a recreational gambler who wins at the races, at a casino, or through poker does not need to declare their winnings as income. Correspondingly, their gambling losses are not deductible.
This position is well-established in Australian tax jurisprudence, and it reflects a long-standing policy distinction between income from a business and gains from activities that are more in the nature of personal recreation or entertainment.
The general rule breaks down when a person’s gambling activities are carried on in a sufficiently systematic, organised, and business-like manner. In these circumstances, the ATO may argue, and courts have found, that the person is carrying on a business of gambling, and that their winnings are assessable business income.
The relevant factors include: whether the activity is carried on in an organised and systematic manner; whether the person has a profit-making intention; whether the person uses skill and judgment rather than relying purely on chance; and whether the activity is substantial in terms of the amounts involved.
No single factor is determinative. The question is whether, looking at all the circumstances, the person’s gambling activities bear the characteristics of a business. The ATO’s own ruling on the topic, IT 2655, acknowledges that ‘mere punting’, however regular or systematic, will rarely amount to a business, though it leaves the question open where the gambling is conducted in a genuinely business-like way or is connected with other business activities.
Poker occupies a unique position in the gambling tax debate because it is widely regarded as a game that involves a significant element of skill. A skilled poker player can achieve consistent positive results over time, an outcome that would be statistically impossible in a purely chance-based game.
The ATO has taken the position in some cases that a poker player who is sufficiently skilled, plays regularly, and achieves consistent profits over time may be carrying on a business, making their winnings taxable.
In one case handled by our office, a Sydney taxpayer had been assessed by the ATO for income tax of almost $200,000 on his online poker winnings. Our office successfully objected to this assessment, arguing that the taxpayer’s activities did not rise to the level of a business and that his winnings were therefore not assessable. The full tax assessment was removed.
If you are a regular gambler, particularly a poker player who earns significant amounts from play, it is worth understanding your potential tax position. In practice, ATO interest is often triggered by the money trail: transfers from offshore poker sites and betting platforms are visible through AUSTRAC data-matching, and large or regular unexplained deposits invite questions about their source. If the ATO determines that you are in the business of gambling, your winnings will be assessable and your losses deductible, potentially creating a significant tax liability for past years.
Equally, if the ATO has already assessed you for tax on gambling winnings, you may have strong grounds to challenge that assessment. Australian Tax Experts has successfully defended clients in exactly this situation. Contact us for a confidential assessment of your position.
A confidential, no obligation first consultation. Early advice is the single most important step you can take.
Specialist tax lawyers and accountants, focused only on resolving matters with the ATO.
All Rights Reserved © 2026 - Australian Tax Experts
