Would it actually boost government revenue, or could it backfire and discourage people from gambling altogether, knowing it’s already hard to win and when they finally do, they still have to pay taxes?
Well, I don't think paying for tax if you win can discourage gamblers to play just because of that specific reason. Come to think of it, majority of gamblers are just losing their money in gambling but did they stop? It didn't became a hindrance to still continue playing.
So what more if you already win? Paying for tax after winning is just a piece of cake as the Government wants to share some of it. Moreover it's mandated therefore any winners who win especially if it's a decent amount needs to comply in order for things to go smoothly.