Gaming online in Canada has always been seen as a grey area in Canadian law when it comes to its legality. Especially so when considering the diverse opinions from around the world surrounding legal gambling. However, in the past few years, there have been a few provinces that started their own online gambling casinos. Some of these casinos are attempting to suggest that offshore operators are operating illegally, yet there is nothing in Canadian law that supports this.
The reality is that online gambling in Canada is becoming increasingly popular. Casinos.co estimate that over 70% of Canadians have gambled in the past year. But it’s far more confusing in reality and to date, the Federal Government has yet to enact any specific legislation in relation to online gambling.
There are a number of important facts that need to be considered when it comes to gambling online in Canada, Canadian law and how it relates to online gambling. It’s illegal to be found in a betting house or to run one according to the Criminal Code of Canada.
However, as this is considered an outdated law, it’s impossible to apply this code to online casinos or online betting houses without further clarification. In 2012, the first fully legal online casino was launched in British Columbia with casino games and poker offered to residents of British Columbia. Based on this, we decided to take a trip down memory lane with hopes of providing some clarification.
There was no such thing as legal Canadian casinos between 1892 and 1969. In fact, you were not allowed to gamble at all on anything at the time other than raffles, charitable lotteries, and horse racing. However, in 1969 a decision was made by the federal government to allow all Canadian provinces to hold their own lotteries as this appeared to be a great way for various local projects to be funded.
In 1985, the federal government made another decision to delegate full control over gambling to the individual provinces. Meaning, each province had control over gambling laws in its province. Unfortunately, the federal criminal code did not change and merely added more confusion to the issue.
A common question we often get, and rightfully so, is “Will my winnings be taxed?”. The straight answer to this question is “No”, assuming that you are not a professional player. But if you are, then that’s a different story.
The long-held belief amongst the majority of Canadians is that lottery and gambling winnings are not subject to income tax, which in part, is true.
However, when it comes to poker winnings, things are a little more complex. Canadian law dictates that ‘Poker winnings are subject to tax if they are “income from a business.”‘ This means that eventually, winning players might be subjected to tax consequences especially if they appear to be “make a living” from these winnings or if they increase their frequency of play.
So, then this begs the question when does playing winning poker amount to a business?
“The Income Tax Act doesn’t provide an answer. And there’s no reported case explaining precisely when the net winnings of individual poker players are subject to income tax. In the entire body of reported Canadian case law on the related question of the taxation of gambling winnings more generally, there are only a few cases where individual gamblers have been found to be in the business of gambling. The upshot for poker players is that it’s probably in only unusually active, skilful and financially successful circumstances that they will face Canadian income tax liability on their winnings. The central legal difficulty arises in determining at which point a taxpayer crosses the line from playing poker casually to playing professionally or as a business.”
What about Lottery winnings?
When it comes to lottery winnings, the idea is fairly similar, but the conditions change due to the nature of the game. According to the Canada Revenue Agency’s windfall rules, if you win money from a lottery, you are not required to report the winnings nor pay taxon those funds. In fact, the CRA has not instituted a cap or limit on these winnings. The only thing to look out for though is that any interest earned from the winnings will be subject to taxation.
The exception to the rule in the case of lottery winnings is if your winnings are considered to be a part of your income. For instance, if your job is selling lottery tickets and you earn a commission for selling winning tickets, you must report your winnings as income.
The bottom line is unless you are a professional poker player or an employee selling lottery tickets, you can rest assured that no tax consequences will be involved.
The majority of casinos that operate online do so in countries that are friendly to operators. Generally, these are offshore operating in Malta, Costa Rica and other countries. The fact they are identified as “offshore” is a bit confusing as a large number of offshore casinos are situated within the Canadian borders; technically falling under their own jurisdiction as they are hosted on Native reserves.
For example, the Kahnawake Mohawk Nation located outside of Montreal started the Kahnawake Gaming Commission in 1996 and offers gaming licenses to online casinos providing a loophole within the Criminal code. This allowed numerous legal Canadian casinos to operate successfully and for Canadian players to play freely online.
Legal Gambling Age
The legal age for gambling in Canada varies slightly according to the different provinces.
Legal gambling age in Quebec and Alberta is 18. People must be at least19 years of age to gamble in British Columbia.
Online operators are obliged to implement several measures across their site to ensure that minors are unable to access any of the services. These policies are in line with responsible gaming initiatives which all licensed and regulated operators must promote to protect customers. A detailed identity verification process is part of these measures to prevent underage gambling.
However, it also falls under the responsibility of the legal guardian to take the necessary precautions to ensure minors have no way of accessing such services. Making use of child-protection software, such as Cyber Patrol, Net Nanny or CYBERsitter is an effective way to block gambling sites from minors.
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