By nature, businesses are taxable, so it makes sense that casinos should be taxed. But in some countries, they also tax individual gambling winnings. That got me thinking, what’s the real purpose behind that? Most of us gamblers are overall losers anyway, so what impact does taxing the winnings really have?
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 it's not supposed to encourage gambling, that's for sure. In some countries taxing something harmful is combatting the harmful effects on society. With tobacco and alcohol it's the physical medical issues that cost countries ton of money, as their workforce isn't efficient enough and because of medical bills in countries that have free medical healthcare.
Agreed, in some countries, the government has a view where they want to discourage gambling indirectly. Just as they increase taxes in drug control, the same is true in the case of gambling. But those countries can certainly earn a large part of their revenue from drugs and gambling, which is why they do not impose any direct ban. Moreover, the regulators can very well assume that if they do not allow gambling platforms, their country's money will go elsewhere and they will lose revenue. Observing such negative aspects, they rather try to allow gambling. They will neither ban this industry nor encourage it, which is why they try to increase taxes. If taxes are increased on gambling platforms, it is not that gambling platforms will close their business, but gambling businesses there will be discouraged.