Tax on Gambling Winnings in Australia (2026): What the ATO Ruling Says, Who Counts as a Professional, and the Crypto Exception
Australia does not tax a recreational gambler's winnings, and it does not let a recreational gambler deduct losses. The Australian Taxation Office has said so in writing since 1991, the courts have never held a mere punter's winnings assessable, and nothing about playing online or offshore changes that. Two things do. If gambling is your business — systematic, organised, connected to the industry — the profits are income. And if you are paid in crypto, the win itself is not income but the coin you hold afterwards is an asset with a cost base, and selling it later can produce a capital gain. This page gives the ruling's own words, the tests the courts applied, and worked examples.
The ruling: IT 2655
Taxation Ruling IT 2655, “Income tax: betting and gambling — whether taxpayer carrying on business of betting or gambling”, was issued by the Commissioner of Taxation on 17 October 1991 after two Federal Court cases in 1989, Evans v FCT and Babka v FCT, and it remains the ATO's position. Its central statements:
In the ruling's words
- “There is no Australian case in which the winnings of a mere punter have been held to be assessable (or the losses deductible).”
- “The Commissioner accepts that it is possible for a mere punter to be carrying on a business of betting or gambling but considers that it will be rare for a taxpayer with no connection with racing other than betting to be carrying on a business of betting or gambling.”
- Quoting Hill J in Babka: although mere punting may constitute a business, “the intrusion of chance into the activity as a predominant ingredient” will generally preclude such a finding.
- “Ultimately each case will depend on its own facts.”
The two halves are symmetrical. Because winnings are not income, losses are not deductions: Babka lost his case for deducting large racing losses precisely because his gambling was held not to be a business. A player who wins A$50,000 on a pokie in a year declares nothing; a player who loses A$50,000 claims nothing.
When gambling becomes a business
The ruling lists what the court looked for in Babka and did not find: the taxpayer “did not maintain an office or employ any staff to assist him, he did not keep any records, he did not use a computer or subscribe to any tipping or information services and did not spend a lot of time studying form”. Volume of betting and size of bets were held not to be decisive on their own. What tips gambling into a business is “the element of system or organisation”, betting “systematically conducted so as to get the most favourable odds obtainable”, and above all a connection with the industry beyond betting: a trainer, breeder or owner who also bets is far more exposed than a punter. The ruling adds that gambling with “a significant element of skill is more likely to have tax consequences than gambling on merely random events”.
Read against a casino: a pokie, roulette, baccarat or keno result is a random event, and the ruling's own reasoning says the intrusion of chance as the predominant ingredient makes a business finding rare even for a systematic player. Blackjack card counting and poker against other players involve skill, and a player running them as an organised, record-keeping, staffed operation would be the kind of taxpayer the ruling has in mind. Nobody playing pokies on a phone after work is.
Online, offshore, pokies, poker: does it matter?
Not to the income question. The ruling is about the character of the activity, not the venue; a win at an offshore online casino is a gambling win like a win at Crown. Three practical differences do exist. First, an offshore operator withholds nothing and reports nothing to the ATO, so there is no paperwork either way. Second, the money arrives as an international transfer or a crypto payment, which is visible to your bank and to AUSTRAC (next section), and if the ATO ever asks, “gambling winnings” is an answer that needs the account history behind it, so keep withdrawal records. Third, the legality of the operator (offering online casino games to Australians is prohibited; playing is not an offence) has no tax consequence for the player; the ruling does not distinguish lawful from unlawful gambling, and the ATO taxes income from unlawful activity in other contexts only where it is income in the first place. Online casino law in Australia covers the legal side.
The crypto exception
The ATO's page on crypto-asset prizes and gambling winnings, updated 22 June 2026, applies the same rule and then adds the one that catches people. The win is not ordinary income, and “for CGT purposes, don't include capital gains and capital losses you make directly from winnings or losses from gambling”. But: “If you win a crypto asset, you may subsequently hold it as an investment. If you dispose of it, your crypto investment may be subject to CGT. … The cost base of the crypto asset is its market value at the time you won it.” The ATO's own example: a player wins A$20,000 of crypto in a lottery, holds it two years, sells for A$30,000, and has a A$10,000 capital gain.
| Event | Tax treatment | Example |
|---|---|---|
| Win 0.2 BTC at a crypto casino | Not income; no capital gain on the win itself | Market value at withdrawal A$30,000 becomes the cost base |
| Convert to AUD the same day at the same price | Disposal at cost base: no gain, no loss | A$30,000 in, A$30,000 out |
| Hold six months, sell at A$36,000 | Capital gain A$6,000, no discount (held under 12 months) | Declared in the year of sale |
| Hold 14 months, sell at A$36,000 | Capital gain A$6,000, 50% discount for an individual: A$3,000 assessable | — |
| Hold and sell at A$24,000 | Capital loss A$6,000, usable against other capital gains | — |
| Deposit crypto you already held to gamble with | The deposit is a disposal of that crypto at market value: a gain or loss on it arises then | Bought at A$10,000, deposited at A$15,000: A$5,000 gain before a single spin |
The last row is the one most players miss. Funding a casino with crypto you bought earlier is a CGT event on the deposit, whatever happens at the tables afterwards; only the gambling result itself is outside CGT. Record the market value at deposit and at withdrawal, and the dates. Crypto casinos covers the operators' conversion and verification clauses.
What the bank and AUSTRAC see
Australian banks report international funds transfer instructions and cash transactions of A$10,000 or more to AUSTRAC, and financial institutions file suspicious-matter reports on patterns they cannot explain. A run of transfers from a foreign payment processor is visible in that system whether or not any tax is owed. None of this creates a tax liability; it creates questions, and the answer “gambling winnings, not assessable under IT 2655” is only as good as the records behind it: casino account statements, withdrawal confirmations, the dates and amounts. Operators do not provide annual statements, and some purge history; download it as you go.
Who does pay tax on gambling
The operators. State and territory governments levy point-of-consumption taxes on licensed wagering operators, and gaming machine taxes on venues; the Commonwealth taxes operator profits. The player's side of the ledger is deliberately untaxed on the reasoning the ruling describes: a punter's winnings are the product of chance and not the fruit of a business, and taxing them would require allowing losses, which for the population as a whole exceed winnings by definition. An offshore casino pays none of this in Australia, which is one of the things the 2027 reforms are aimed at; it does not change what the player owes, which remains nothing on the win itself.
FAQ
Do I pay tax on gambling winnings in Australia?
Not as a recreational gambler. IT 2655 states there is no Australian case in which a mere punter's winnings have been held assessable, and the ATO treats gambling winnings as outside income unless the gambling is a business. Losses are correspondingly not deductible.
Do online casino winnings from an offshore site count?
The same way. The ruling is about the nature of the activity, not the venue. The practical difference is that the money arrives by international transfer or crypto and is visible to your bank and AUSTRAC, so keep records.
Are poker winnings taxed?
Not for a recreational player. The ruling notes skill games are “more likely” to have tax consequences, but only where the activity is a systematic, organised business; a player without that structure is a punter.
Is crypto won at a casino taxable?
The win is not income and not a capital gain. The crypto you then hold has a cost base equal to its value when won, and selling it later for more is a capital gain (50% discount after 12 months for an individual); selling for less is a capital loss. Depositing crypto you already owned is itself a disposal at market value.
Can I deduct gambling losses?
No, for the same reason winnings are not taxed. Babka v FCT was a loss case: the taxpayer wanted the deduction and was refused because his gambling was not a business.
Do I need to declare a big win?
Not on your return. Keep the records in case the ATO or your bank asks where a transfer came from.
Sources and method
Quotations are from Taxation Ruling IT 2655 (Commissioner of Taxation, 17 October 1991; case references Evans v FCT 89 ATC 4540 and Babka v FCT 89 ATC 4963) and from the ATO page “Crypto asset prizes and gambling winnings” (last updated 22 June 2026), both read on ato.gov.au on 19 September 2026. The CGT discount and AUSTRAC thresholds are the general rules in force at that date. Worked examples are arithmetic. This page is general information about Australian tax law as published by the ATO; it is not advice about your circumstances, and a large or unusual win is worth a registered tax agent's hour. We earn a commission when readers sign up through links on this site; it did not decide what is written here.
No online casino is licensed in Australia. Gambling is a cost, not an income; you must be 18 or over. Free, confidential support is available 24/7 on 1800 858 858 through Gambling Help Online.