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Thursday, September 21, 2023

Horse Racing and Taxes, what does the Australian Law Say?

Did you know that horse racing is the first form of gambling institutionalised in Australia? Horse racing dates back to the early 1800s when British settlers docked on Australian shores. These settlers brought hundreds of horses, introduced horse racing, and ignited a passion for the sport among Australians.

This sport took a monumental leap as a legal sport in Australia when Governor Lachlan Macquarie sanctioned the first official race in Sydney in 1810.

Why Is Horse Racing Popular Down Under?

Various factors contribute to the popularity of horse racing in Australia. Yet, the following stood out prominently:

  • Australia is home to more than 300 racecourses. There’s almost always a racecourse nearby, making horse racing accessible regardless of whether one lives in the urban cityscapes or the countryside.
  • Thousands of players enjoy the sport. The inherent thrill of this sport encourages Australians to participate in horse racing regularly. The camaraderie, combined with the vibrant atmosphere, offers a captivating experience to participants.
  • The Australians ingrained penchant for Betting. The Australian government has legalised a broad gambling spectrum, with horse racing holding a special place. The nature of this sport aligns perfectly with the Australians’ penchant for games of chance. Moreover, the government support, and the inherent thrill of the game, make horse racing an exciting pastime and a celebrated national sport in Australia.
  • Horse racing is legal in Australia. It is under the administration of the Australian Racing Board, an organisation established to regulate and promote thoroughbred racing in Australia.

Additionally, horse racing has substantially contributed to the economy. It created thousands of jobs and bolstered economic activities. However, despite the popularity of horse racing, some states deemed it necessary to prohibit jump racing. These races involve clearing hurdles up to one metre high, with the horse carrying a jockey on its back.

Over concerns that jump racing poses risks of injury to the horses, some states in Australia banned jump racing. For example, Racing South Australia, in 2021, announced its decision to prohibit jump racing in South Australia as a result of the sport becoming unsustainable.

Taxation on In-Country Offline Sports Betting

In-country offline sports betting has been the mainstay for avid bettors since its legalisation in Australia in the 1980s. This type of sports betting involves going to the tracks to place wagers.

Generally, the Australian Taxation Office (ATO) does not consider winnings from in-country offline sports betting as income; hence these winnings are not subject to tax. However, professional gamblers may need to include their winnings in their assessable income and pay tax accordingly.


Note that as to the ATO rulings, a person is considered a professional gambler only if they have a tangible business connection with the gambling industry. In the horse racing context, punters have to pay taxes on their winnings only if they have a direct business affiliation with the racing industry. Some examples of direct affiliation with racing include being a horse breeder or trainer.

How about winnings from offline sports betting in other countries?

The same general tax principles for domestic winnings apply to winnings from horse race betting in other countries. Those who engage in gambling as a hobby do not have to pay taxes on their winnings abroad. That said, Australians may still need to pay taxes on their winnings, depending on the tax rules of the host country.

Taxation on Internet Sports Betting

Enter online sports betting. In 2001, the Australian government enacted the Interactive Gambling Act, which regulates businesses offering gambling services. Specifically, this ACT excluded horse racing from among the prohibited gambling service.

The general overview for online sports betting is that winnings are not assessable income. As discussed previously, a winner does not have to declare and pay taxes on these winnings, provided that they are not considered professional gamblers who spend the majority of their time honing their skills at an Australian online casino for real money.

Taxes and Fees for In-Country Online Sports Betting Operators


The Australian Taxation Office primarily looks into the revenues of betting operators. Sports betting operators in Australia are taxed based on these main points:


  • Point of consumption tax (PoCT). The states and territories in Australia adopted the PoCT tax system, which imposed taxes on betting operators based on their net wagering revenue.
  • License and operating fees. Online betting operators must secure licenses in the jurisdiction where they wish to operate.
  • Goods and services tax (GST). Similar to other business owners, online gambling operators must register for GST. The amount of tax is calculated by multiplying the GST rate by the difference between the total gambling revenue and the amount paid as winnings.


Taxes and Fees for Foreign Online Sports Betting Operators


Foreign online sports operators who cater to Australian-based audiences must adhere to Australian tax and regulations. Here are factors to consider for fees and taxation purposes:


  • Point of consumption tax (PoCT). The PoCT also applies to foreign operators, so an operator based abroad is expected to pay tax if it provides services to customers in an Australian state or territory
  • Goods and Services Tax (GST). The ATO requires foreign betting operators to register and pay GST for betting services provided to Australian residents.
  • Double taxation agreements (DTAs). The Australian government has signed several DTAs with other countries to protect its citizens from double taxation. These agreements may affect foreign betting operators’ tax obligations in Australia.


Engaging in sports betting activities brings along various tax considerations. The continued adoption of new tax laws and legislation can lead to confusion. It can cause non-compliance, which may put bettors and operators at risk of legal consequences.

That said, all stakeholders must regularly review and keep themselves updated with the Australian taxation guidelines on gambling taxes. On the part of the tax authorities, they must ensure that such policies will maintain the cultural essence of horse racing in Australia.

Striking a balance between adopting new tax laws and preserving the legacy of horse racing is essential in navigating the complex world of modern-day sports betting.

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