Online Casino Tax & Gambling Laws

A Guide to Online Casino Tax & Gambling Laws

All varieties of gambling activities, land-based as well as online, are illegal in Canada if they are not licensed or operated by Canada’s federal or provincial government. In the absence of proper online gambling laws, online gambling is considered to be a grey area in Canada.

Canada’s law books do not prohibit or criminalize the act of placing and receiving bets online, but the country considers all online gambling sites illegal if they are not operated or licensed in one of its provinces.

The absence of online casino regulation in Canada hasn’t prevented its residents from gambling online at offshore online casinos. Thousands of foreign operators have found various ways of dodging the laws and accepting bets from Canadian residents.

There is a case or two of provincial governments cracking down on offshore online gambling sites. For example, British Columbia moved court against Starnet Communications International, a Delaware based gambling company, and forced them to pay $4 million in pending gambling taxes. In 2013, Ontario raided 10 illegal gambling establishments, filed cases against 19 players, and seized over $2 million in player deposits at Platinum Sportsbook.

But Canadian online casino players as well as offshore online casinos accepting Canadian players are not letting these cases bother them. You will find several safe, secure, and licensed offshore online casinos that accept Canadian players and allow them to play in CAD.

Gambling Regulators in Canada

Almost all forms of gambling in Canada are regulated not by the federal government, but by various provincial governments. The Canadian Gaming Association (CGA) also plays an active role in the development and regulation of the gambling industry in Canada.

Some of the gambling regulatory bodies in Canada are:

  • Kahnawake Gaming Commission
  • British Columbia Gaming Policy and Enforcement Branch
  • Quebec Regie des Alcools des Courses et des Jeux
  • Alcohol and Gaming Commission of Ontario
  • Nova Scotia Alcohol and Gaming Authority

About the Kahnawake Gaming Commission

While discussing online casino tax and gambling laws in Canada, the Kahnawake Gaming Commission deserves special mention as it is a regulatory body that is located within Canadian borders.

Established in 1996, the Kanhawake Gaming Commission grants licenses to operators of online gambling businesses and regulates hundred of online sports betting sites, online poker rooms, and online casinos. It also licenses and regulates three poker rooms located in the Mohawk Territory of Kahnawake. Operators seeking an online gambling license from Kahnawake have to pay an initial application fee of US$25,000 along with a key person license fee of US$5,000.

Although online gambling is unregulated in Canada, the federal government supports the Kahnawake Gambling Commission because the Mohawk Council of Kahnawake and the Kahnawake Gambling Commission have used aboriginal rights to pass their Gaming Law; and the country’s Constitution Act, which was enacted in 1982, honours those rights. As a result, the Canadian government does not question the legality of the Kahnawake Gambling Commission and has never challenged its activities.

So you can take it for granted that it is legal for residents of Canada to play at online casinos licensed and regulated by the Kahnawake Gambling Commission. At the time of writing, the Kahnawake Gambling Commission has granted licenses to 50 companies that own and operate 250 online gambling sites around the world.

How Canada Can Learn from Sweden

Sweden brought into effect a set of excellent online gambling laws on Jan 1, 2019. These laws not only ended the gambling monopoly that the state-owned Svenska Spel had been enjoying from the past several years, but also threw open Sweden’s newly regulated online casino gaming market to private operators.

By effectively regulating its online casino gaming industry, Sweden successfully solved its problem of illegal gambling. The country is now in a position to control private operators who had illegally grabbed 29% of its multi-billion dollar online gambling industry.

Today, operators have to first obtain a license from the Swedish Gambling Authority before running an online casino business in Sweden. The regulation has also benefited Swedish residents. They no longer have to play at offshore online casinos and fall prey to unscrupulous operators. Swedish gambling laws not only protect licensed operators, but also their Swedish customers. Though, some players still prefer casinos with MGA license with Trustly.

Since operators have to pay 18% of their profits as tax revenues to the Government of Sweden, it means extra revenue for the state. The government can use these funds for a variety of social welfare profits, diverting part of them for research and treatment of gambling-related problems.

Online casinos licensed in Sweden not only have to pay taxes to the government, but also have to implement proper measures to protect vulnerable groups, including minors and players at risk of problem gambling. Sweden’s gambling laws require licensed operators to support responsible gambling, provide adequate information about safe gambling, and encourage players to use gambling management tools such as self-exclusion and setting deposit limits.

How to Gamble Responsibly in Canada

The safest way to gamble in Canada is to stick to online casinos licensed by provincial government. However, the disadvantage of playing at provincial online casinos is that they offer a limited selection of games. Also, they accept only players who are physically located in that province.

Canadian online casino enthusiasts are, therefore, left with no other option but to sign up at offshore online casinos. Most of them prefer signing at online casinos licensed by the Kahnawake Gambling Commission. If you live in Canada and sign up at an offshore online casino, make sure that it has a license to operate and that it offers online gambling management tools such as self-exclusion.

If you are playing at a land-based or online casino licensed by a provincial government in Canada, you are absolutely safe and secure. Canada has a number of responsible gambling organizations that provide information, help, counselling, treatment, and support for compulsive gamblers.

The following is a list of Canadian responsible gambling organizations:

  1. Responsible Gambling Council (RGC) – The RGC is an independent non-profit organization that focuses on the prevention of problem gambling by organizing a number of information and awareness programs. The RGC runs PlaySmart Centres where Canadians can learn more about gaming and get help if they experience problem gambling.
  2. The Ontario Lottery & Gaming (OLG) Corporation– The OLG’s responsible gambling program educates players about gambling in a responsible manner.
  3. Canada Safety Council– This organization provides support for compulsive gamblers and information on how to avoid problem gambling.
  4. ca– This website offers online tools to help players gamble responsibly.

You have a number of organizations to turn to for help and support if you become a problem gambler in Canada. This makes it safe to gamble online in Canada provided you make sure that you sign up at a licensed online casino.

Another great benefit of gambling online in Canada is that your winnings are absolutely tax free. You can keep every dollar of those jackpots you win online and don’t have to share them with the tax man.

However, the legal situation changes if you are a gambler by profession. If you play online poker or online casino games for a living, the law requires you to declare your winnings and pay taxes on them.

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