Gambling Tax Canada 2026: The "Windfall" Exemption
Legal Analysis by Marc-André Fortin | Feb 4, 2026
If you hit a $1 million jackpot on a slot machine in Canada, how much do you owe the CRA?
The answer is $0.00.
The Law: Paragraph 40(2)(f)
According to the Income Tax Act, gambling winnings are not considered "Income from a Source" (like employment or property). Instead, they are classified as a "Windfall"—a lucky gain that involves no expectation of profit.
- No Tax on Winnings: Whether it's $5 or $5 million.
- No Deduction of Losses: Because you don't pay tax on wins, you cannot write off your losses.
The Exception: "Professional Gamblers"
The only time the CRA steps in is if you are running a Gambling Business. This does not apply to slot players (since slots are 100% luck). It targets professional poker players or sports bettors.
Case Law: Leblanc vs. The Queen
In this famous case, two brothers won millions betting on sports lotteries. The CRA tried to tax them. The Supreme Court ruled in favor of the brothers, stating that even though they were "systematic," gambling is inherently risky and therefore not a business.
Takeaway: Unless you have inside information or a rigged system, you are safe.
What About Crypto Winnings?
This is where it gets tricky in 2026.
If you win 1 Bitcoin at a casino, the win itself is tax-free. However, if you hold that Bitcoin and it doubles in value, you may owe Capital Gains Tax on the increase in value from the moment you won it to the moment you sold it.
US Taxes (Las Vegas & Online)
If you win over $1,200 USD in the United States, the IRS will withhold 30%.
- The Fix: Canadians can reclaim this money.
- Form 1042-S: You will receive this form from the casino.
- Action: File a US Non-Resident Tax Return to prove your losses offset your wins.
Gambling Tax FAQ
Only if it becomes a business. If you have another job and play for fun, even if you win big, the CRA has historically lost every case attempting to tax recreational players.
The win itself is tax-free. However, any interest or investment income generated after you deposit those winnings into a bank account IS taxable.
No. As an offshore licensed operator, Spinbet does not issue T5 forms or report individual player transactions to Canadian tax authorities.