TQOTW: Professional Gambling

My client’s son is a professional poker player and wins around £4,000 a month from playing poker. This is all he does and has no other earnings. Are the winnings taxable if playing poker is his profession?

Betting and gambling do not amount to trading and so the winner is not taxable on their profits nor will the loser receive relief for any of their losses from gambling.

However, where you are organising activities to profit from the gambling public, then this will normally amount to a trade i.e bookmakers would be taxable on their profits.

With a professional gambler, you may be concerned as to whether their winnings would be taxable because gambling is their “full-time job” and they make their living by gambling and being successful at it.

The fact that an individual may or may not have some kind of system by which they place their bets and are successful enough to earn a living by gambling does not make their activities a trade. This is upheld in the case of Graham v Green [1925] 9TC309 which concerned an individual who earned their living by betting on horses.

Rowlatt J says “I do not think that you can find, in his case, any conception arising in which his individual operations can be said to be merged in the way that particular operations are merged in the conception of a trade. I think all you can say of that man … is that he is addicted to betting. It is extremely difficult to express, but it seems to me that people would say he is addicted to betting, and could not say that his vocation is betting. The subject is involved in great difficulty of language, which I think represents great difficulty of thought. There is no tax on a habit.”

So whilst a professional poker player may have expertise in poker and may be systematic in their gambling, this is not enough to create a trade of being a ‘professional gambler’.

In some instances, a professional gambler may be carrying on a trade. For example, where they receive money for appearing on TV programmes. In this case, they are providing a service to the TV production company for a fee. If they were to be gambling on the show, whether or not their winnings are proceeds of that trade is a question of fact.

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If you have a tax query, why not contact the Tax Advice Line on 0844 892 2470 to discuss it. Our team of experts have a wealth of experience and can also provide a written consultancy service at competitive rates.

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Before joining the team, Vivienne had worked for small boutique tax firms which gave her exposure to a wide variety of tax. She dealt with tax issues mostly for owner-managed businesses and high net worth individuals. Vivienne is a member of the Association of Tax Technicians and is currently in the middle of studying to become a Chartered Tax Advisor.

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