Sports betting taxes in Canada: what the CRA expects

If you bet on sports for fun in Canada, your winnings are generally not taxable. That is the headline, and for most bettors it is the whole story. It changes if betting becomes a business for you, if you bet with crypto, or if you place bets while you are in the United States, where the rules are very different.

This guide covers how the Canada Revenue Agency (CRA) approaches sports betting winnings, the line between recreational and professional bettors, what happens to winnings from US sportsbooks, and the records worth keeping. It is general information, not tax advice; if real money is at stake, speak to an accountant.

Do you pay tax on sports betting winnings in Canada?

For a recreational bettor, no. Canadian income tax applies to income from a source, such as a job, a business or investments. Winnings from betting as a pastime are treated as windfalls, not income from a source, so you do not report them on your return. The CRA's guidance on lottery winnings and similar receipts, and decades of court decisions, follow this approach.

The same logic applies to bonus bets and promotional winnings from a sportsbook when you are betting recreationally.

There is a flip side. Because recreational winnings are not income, recreational losses are not deductible. A bad season does not reduce your tax bill.

When does the CRA treat a bettor as a professional?

Betting can become a business, and business profits are taxable. The leading test comes from a 2002 Supreme Court of Canada decision on when an activity is a source of income: is the activity carried on in pursuit of profit, and, where there is a personal or recreational element, is it run in a sufficiently commercial way?

For betting, courts and the CRA look at factors like these:

Canadian courts have been slow to call gambling a business, because chance usually stays dominant. In a 2006 Tax Court case, two brothers who spent millions on provincial sports lottery tickets and won large sums were found not to be carrying on a business, because they had no system that took the risk out of their betting. Contrast that with a 1997 case in which a pool player who controlled the conditions of his games was found to be running a business.

Arbitrage and matched betting

Strategies built to remove chance look more like a business. Arbitrage betting, where you back every outcome of an event across different books to secure a small profit whatever the result, and matched betting, where you use free bets to produce a near-certain return, both rely on method rather than luck. Tax commentators have flagged that systematic arbitrage carries a real risk of being treated as business income. If you run either at any scale, get professional advice.

What changes if you are a professional

If your betting is a business:

• Net profits are taxable at your normal marginal rate, as business income.
• Losses and expenses related to the business can be deducted, such as data subscriptions or software used for betting.
• CPP or QPP contributions can apply, since business profits are self-employment earnings.
• You must keep business-grade records to support what you report.

Being treated as a professional is not something most bettors should want. Taxable profits in good years only partly offset by deductible losses in bad ones is rarely a better deal than tax-free windfalls.

Are crypto betting winnings taxed?

The winnings follow the rules above. The crypto does not. The CRA treats crypto as property, so selling it, swapping it or spending it can produce a capital gain or loss in Canadian dollars, separate from any bet. Half of a capital gain is included in taxable income.

For example, you buy Litecoin worth $400, deposit it, win, and withdraw Litecoin worth $900 at the time it arrives. Your betting win is a windfall. The Litecoin you received has a cost base of $900. If you sell it a month later for $1,000, you have a $100 capital gain, of which $50 is taxable. How the original deposit should be treated is not spelled out in CRA guidance specific to gambling, which is another reason to keep careful records. Our guide to crypto sports betting in Canada covers the practical side, and our wider guide on whether gambling winnings are taxed in Canada works through a full crypto example.

What if you bet on sports in the United States?

Many Canadians bet while visiting US states with legal sportsbooks. To use a state-licensed book you generally need to be physically in that state, the same way Canadian regulated books check your location. The tax treatment is where the surprise comes.

US withholding on non-residents

The United States taxes gambling winnings, and its rules generally require 30% federal withholding on gambling winnings paid to non-residents. There is an exemption for a short list of casino table games (blackjack, baccarat, craps, roulette and big-6 wheel), but sports bets are not on it. The payer reports the withholding on Form 1042-S. Some states also tax gambling winnings.

Recovering some of it

Under the Canada-US tax treaty, Canadian residents can deduct their US gambling losses against their US gambling winnings by filing a US non-resident return, Form 1040-NR, which in turn requires a US taxpayer number (ITIN). If your losses in the same year offset your wins, some or all of the withholding can come back.

Two cautions. First, from the 2026 tax year, a US law passed in 2025 limits deductions for gambling losses to 90% of the losses. How that limit interacts with treaty claims by Canadians is a question for a cross-border tax specialist. Second, only losses on US wagers count, and you need records to prove them.

A worked example

The figures below are illustrative, to show the mechanics, not a calculation of anyone's actual tax.

You visit a US state during the 2026 season and win one bet with a profit of $2,000 (US). The book withholds 30%, which is $600. On the same trip you lose $1,200 on other bets at US books.

Without records of the $1,200 in losses, the refund would be nothing. Filing costs, the ITIN application and any state tax are not included.

Does Canada tax it again?

Generally no. A recreational US win is still a windfall in Canada, so there is no Canadian tax on it. That also means there is usually no Canadian tax to claim a credit against, so whatever the US keeps is a final cost unless you recover it there. The same applies to US lottery prizes, which our guide to whether lottery winnings are taxed in Canada covers.

What records should a sports bettor keep?

Even if you never owe tax, good records protect you if anyone asks, and they are essential if you are near the professional line or bet with crypto.

• Your sportsbook account history, exported or screenshotted regularly, since accounts can be closed.
• Deposit and withdrawal records, with dates and amounts.
• For crypto: the coin, network, CAD value on the day and transaction hash for each transfer.
• Bank and trading platform statements that match those transfers.
• Any US forms, such as a 1042-S, and win/loss statements from US books.
• If you think betting may be a business for you: a ledger of bets, stakes, results and expenses.

Quick reference

Responsible gambling

Tax-free winnings are not a reason to bet more. The bookmaker margin means most bettors lose over time, and the money that matters is what you can afford to lose. Set deposit limits and take breaks; see our guide to betting odds for how the margin works.

If betting is affecting your finances, help is free and confidential: ConnexOntario 1 866 531-2600 in Ontario, Jeu: aide et référence 1 800 461-0140 in Quebec, and the services listed on our responsible gambling page for other provinces. For where you can bet legally, see is sports betting legal in Canada and our best betting sites in Canada.