Are Crypto Gambling Winnings Taxed?

A big win with a crypto casino or betting site might just come with a big tax bill depending on where you live. Learn all about how crypto gambling is taxed.

Are crypto gambling winnings taxed?

A big win may come with a big tax bill - but it all depends on where you live.

No tax office has issued guidance on crypto gambling winnings just yet. However, there are extensive guidelines on crypto taxation in general, as well as gambling tax in general. The type of tax you’ll pay depends on the transaction you’re making. There are only a few transactions we need to look at in regard to crypto gambling taxes:

• Betting your crypto.

• Winning crypto.

• Selling your winnings for fiat currency.

Each tax implication is different, so let’s break it down.

Betting crypto tax

There is no clear guidance on betting crypto and how it would be taxed. Arguably, it could be seen as spending your crypto on goods or services - which is subject to Capital Gains Tax. But as you may get nothing in return, it’s a grey area. There is an argument you could feasibly write it off with no realized loss or gain.

Crypto winnings tax

When it comes to winning crypto, similarly there’s very little guidance from a tax perspective for crypto winnings. There is however extensive guidance on gambling winnings in general and it all comes down to where you live. For example:

• US: Gambling winnings are subject to both Federal and State Income Tax.

• UK: Gambling winnings are tax free.

• Australia: Gambling winnings are tax free.

• Canada: Gambling winnings are tax free.

It’s bad news for US investors, but good news in most other countries. However, you likely won’t want to keep your gambling winnings in crypto - so what happens when you sell your crypto winnings for fiat currency?

Selling crypto winnings tax

When you sell your crypto winnings, you’ll pay Capital Gains Tax on any capital gain. This is the difference in value between when you acquired your asset and when you sold it.

This gets complicated due to the cost basis. Your cost basis is how much you spent on your crypto. Arguably, when it comes to gambling winnings - you have a cost basis of zero. So potentially, your entire crypto winnings could be subject to Capital Gains Tax in countries like Canada where they use an adjusted cost basis method. You can find out more in our cost basis guide.

Koinly makes crypto tax simple

Whatever your crypto investments - whether it's gambling or trading - the tax man will want a cut. But Koinly can save you hours of maths and spreadsheets.

All you need to do is sync the wallets and exchanges you use using API or by importing a CSV file of your transaction history. Once you've done this, Koinly will calculate your capital gains, losses, income, and expenses across all the platforms you use. You can see this in your tax summary - all on our free plan.

If you'd like to download a tax report, upgrade to a paid plan from $49. We offer a huge variety of tax reports from around the world, ready to hand over to your tax office - for example, the IRS Form 8949 and Schedule D, the ATO myTax report, and a HMRC Capital Gains Summary. All you need to do is hit download and add it to your tax return. Get started for free with Koinly today.