How is Online Gambling Different in US and Canada?

How is Online Gambling Different in US and Canada?

There are three major differences between Canadian gambling laws and those of the United States. First and foremost are the legalities surrounding the activity. This directly impacts what forms of iGaming citizens can partake in, and on which websites. Another big difference is how the government taxes gambling winning. And lastly, there’s a contrast in game availability and competitive worthiness.

We’ll talk about each of these individually below. Feel free to jump to the topic you find most interesting.

• Differences in Legalities
• Taxation of Winnings
• Range of Games & Bets

American vs. Canadian Mobile Betting & Casino Laws

This is by far the most overwhelming difference between US and Canada. There are a few similarities, including the fact that both countries leave the choice to legalize or ban iGaming up to individual provinces/states. Between them, there are far more differences in the laws surrounding iGaming. Let’s start with the breadth of lawful availability.

Scope of Regulated Online Gambling in US & Canada

• The genres may vary, but online gambling is legal in every Canadian province and territory, from British Columbia, to Nunavut, to Nova Scotia. Each one allows, at the least, online lottery sales, with most also regulating sports betting and online casino gaming.
• In the US, only 27 of the 50 states, plus the District of Columbia (Washington D.C.), have some legal form of online gambling. That’s compared to 48 states that offer some form of legal land-based gambling. Hawaii and Utah believe all gambling is inappropriate, immoral, and therefore prohibited by law without exception, online or on land. We cover this topic in more detail below.

Regulatory Border Restrictions

• In Canada, there are no virtual border restrictions. Players can gamble at a locally licensed and regulated website under the supervision of their own province, or they can venture out to international gambling websites. The latter is discouraged by provincial authorities, but there are no laws on the books that prohibit offshore iGaming. It’s what legal-eagles like to call a ‘grey area’ of the law; when something is legal only because it is not illegal.
• Ring-fencing is alive and well in the US market. Every state that’s chosen to regulated the industry has scrupulous rules in place detailing which websites are and are not permissible. The laws are very black and white. In the black column, international operators are strictly off limits.

Healthy Competition Among Operators

• This is the one area where the US supercedes Canada. Every US state that permits online sportsbooks, casinos, poker rooms, etc., promotes a market brimming with competition. They provide players with multiple operations, featuring variable game selection and promotional offerings.
• In contrast, all but one of Canada’s provinces hosts a single iGaming portal, run by its respective government agencies. It’s monopolies such as these that drive so many Canadians to offshore gambling websites in the first place. Only Ontario has taken steps to open the doors wide to competition, and the results have been overwhelmingly positive. 

Taxes on Gambling Winnings in Canada vs. US

If I could pick one thing that I love most about Canada’s gambling laws, it’s that the vast majority of players don’t pay taxes on winnings. Only professional gamblers are required to pay taxes, since it is their line of work. So long as your gambling is classified as a hobby, winning cannot be taxed.

The same cannot be said of the United States. Americans don’t pay taxes on small amounts, but when the win amounts to any substantial, the government wants its slice. Whether it’s a lottery strike, a jackpot on the slots, or a profitable poker tournament, good old Uncle Sam will be there with one finger pointing, and the other hand out for collection.

Every online casino requires players to verify their identity, including the provision of their US SSN or Canadian SIN. In the US, all wins and losses are reported to the government. Canada, on the other hand, only  only taxes players with ‘professional’ status.

In Canada, the cashier cage will happily pay out any size win, by cash, cheque, or bank transfer (if large enough). Land-based casinos in the US require players to fill out a declaration form if they win any taxable amount. Once you complete the form, the cashier will hand over 76% of your winnings, withholding the rest for federal tax coffers.

How Much Tax is Paid on What Amounts?

If you’re in America, the US government (IRS) will take 24% of your gambling winnings. The state you won the money in will also want a cut, with rates varying from one jurisdiction to the next. Nevada (home of Las Vegas) charges 6.75%. New York wants 8.82%. New Jersey is more reasonable, taxing gambling profits at its standard income tax rate of 3%.

What you bet on, the amount you win, and how much you had to wager to win it, will determine whether you owe taxes in the US. According to a prominent tax office, the breakdown is as follows:

• Horse Track Betting – $600+ (if the win is x300 the amount wagered)
• Slot Machines & Bingo Games – $1,200+
• Keno Games – $1,500+ (excluding the amount bet)
• Poker Game/Tournament – $5,000+ (excluding bets/buy-in)
• Lottery Draw or Scratch Card – $5,000+

In Canada, a player may be considered “professional” by the CRA if the player:

• exhibits gambling activities are focuses primarily on profit over entertainment;
• utilizes above-average knowledge and/or skills that elevates their odds of winning;
• engages in regular gambling activities;
• demonstrates a reliance on gambling profits to maintain their livelihood.

When a professional gambler pays taxes on their winnings, the tax rate is the same as standard business income tax. Your total annual profits (minuses losses) determine your tax bracket and percentage rate.

Range of Bets & Game Variety

Last but not least are the types of bets players have access to in different parts of North America. I’ll start above the 49th parallel, since the answer in this region is all-encompassing.

Canadians can access all types of bets, on all types of gambling amusements. This is because (as stated earlier) we are not restricted by local borders. With access to both domestic and international gambling websites, Canucks face no limits. All sports, all casino games, every poker variant and bingo game on the world wide web – it’s right there at our fingertips. That includes a much wider variety of games from the world’s top software brands like Games global, Microgaming, NetEnt, Playtech, Wazdan and more.

In the US, players may only bet on the activities, games and software their state deems worthy. Currently, about half of the US has legal online sports betting, while online casino games are limited to only a handful of jurisdictions. Here’s the breakdown of legality as of Spring 2023.

• Internet Sports Betting – 24 States + D.C.
  • Arizona, Arkansas, Colorado, Connecticut, Illinois, Indiana, Iowa, Kansas, Louisiana, Maryland, Massachusetts’s, Michigan, Nevada, New Hampshire, New Jersey, New York, Ohio, Oregon, Pennsylvania, Rhode Island, Tennessee, Virginia, Washington D.C., West Virginia, and Wyoming
• Online Casinos – 6 States
  • Connecticut, Delaware, Michigan, Pennsylvania, New Jersey, and West Virginia
• Online Poker – 6 States
  • Delaware, Michigan, Nevada, New Jersey, Pennsylvania, and West Virginia
• Online Lottery – 7 States
  • Georgia, Illinois, Kentucky,  New Hampshire, New Jersey, Pennsylvania, West Virginia

With the facts laid out, it’s easy to see how Canada mobile betting and casino websites are different, and for the most part better, than those in the US.