When Poker Winnings Become Taxable
A million-dollar poker run sounds like the ultimate loophole, until the CRA decides it looks like a job. We talk with criminal defence lawyer Michael Mulligan about a Supreme Court of Canada leave decision that leaves standing a key ruling on poker winnings and Canadian income tax, and the real lesson it carries for anyone who treats gambling like a serious side hustle or a full-time living.
We get into why most gambling winnings in Canada are generally tax-free under the Income Tax Act, then zero in on the exception: when the activity becomes business income. Hours spent, strategy, risk management, consistent profits, and relying on poker as your main source of income can all push you over the line. And if it’s business income, it can cut both ways, because deductions for losses and expenses may be available just like any other business.
Then we shift to a topic that frustrates the public and the courts alike: criminal cases that take too long. We unpack Jordan’s hard timelines under Charter section 11(b), what counts as delay, and how the Supreme Court now treats “exceptionally complex” prosecutions with many accused and mountains of disclosure.
If you care about Canadian law, taxes, and how court decisions affect everyday choices, hit subscribe, share this with a friend, and leave us a review. What do you think should count as “work” when luck is involved?
Legally Speaking with Michael Mulligan is live on CFAX 1070 every Thursday at 12:30 p.m. It’s also available on Apple Podcasts or wherever you get your podcasts.
Legally Speaking June 4, 2026
Rob Buffam [00:00:00] You’re listening to C-Fax 1070, and our next guest is no stranger to the show, Michael Mulligan, Barrister and Solicitor at Mulligan Defence Lawyers. Michael, thanks for doing this. Thanks for being on the program today.
Michael T. Mulligan [00:00:11] Hey, thanks so much. Always great to be here.
Rob Buffam [00:00:13] Yeah, good to chat with you. Good to hear your voice. And you’ve got it. You’ve dug up some interesting cases, including one I gather about gambling, the Supreme Court of Canada decision not to hear an appeal. Maybe, you know, if that’s a good place to start, let us know, because I know coming out of last week of the Leg, there was some interest in the fact that the Supreme court of Canada declined to hear an appeal of a New Brunswick case related to Aboriginal title. So the very fact of whether a Court decides to hear an appeal or not is in itself significant.
Michael T. Mulligan [00:00:44] That’s right. And so that was one of the things that I thought was worth commenting on about this case, as well as the, just some of the underlying issues that were dealt with in terms of taxation as it relates to people who are playing Texas Hold’em poker. And so Just like in the case you mentioned dealing with a leave application. This was an appeal, in this case so the one that we’re talking about today, from the Federal Court of Appeals of Canada and the Federal court of Appeal hears appeals from a number of sources including from the tax court. And the way it works is that, like with appeals from other provincial courts of appeal, you don’t have the right to just go to the Supreme Court of Canada because you want another kick at the can. In most cases, if you wish to get a case in front of the Supreme Court of Canada, you need to make what’s called an application for leave or permission to bring the appeal there. And ordinarily, the Supreme Court of Canada is very selective in terms of the cases that it can hear each year, because it can only hear a limited number and there would be hundreds of people who might for a variety of reasons wish to try on one more level of appeal. And typically, the Supreme Court of Canada would pick cases on the basis of things like whether it’s a matter of national interest or importance, or sometimes they’ll pick cases where there’s an interesting or important legal issue that needs to be settled, or sometimes they will pick cases where, for example, you’ve got courts of appeal in different parts of the country that have come to completely different conclusions. And so those would be the sort of things they would take into account when deciding whether to grant leave. And in the case, you mentioned in terms of whether land claims can include personal property, an issue that’s live in B.C., the Supreme Court of Canada in a different case where that was an issue, declined to grant leave. And one thing to be said about that is it’s not necessarily an endorsement because there are a variety of reasons why the Supreme Court of Canada could choose not to hear something, but at least in their view, that is not of national importance or the particular case they want to hear to sort out that issue. And so the decision that came out, one of the decisions that came today from the Supreme Court of Canada was a decision denying a leave application to this case involving taxation of poker winnings. And reading the underlying case is an interesting one, and it has some things that people should be aware of, because it can have implications in terms of maybe what you want to spend your spare time doing, but also when you might have to pay tax on something. And one of the things that underlies that, and that’s an interesting difference between, for example, Canada and the United States, is that in Canada, there is a specific provision in our Income Tax Act. That provides that you don’t have to pay income tax if you wind up winnings from, for example, a bet or prize or a lottery scheme. So if you win the lottery, in Canada, it’s not taxable. That’s not the case for example in the United States. If you’re down in the U.S. and you made some win at a casino for example, they’re going to keep a portion of that money because may be due tax down there did not know that that’s a
Rob Buffam [00:04:11] That’s a big deal. Obviously, that makes the winning so much more.
Michael T. Mulligan [00:04:15] Yeah, and it’s an interesting one. I mean, in terms of the lottery thing, you can sort of understand that in Canada, given that lotteries have generally, historically in Canada have been operated by governments. So they really are in their entirety of tax. But we’ve just as a policy decision decided to apply that same thing to other kind of prizes, bets, or things you might win. So if you go to the casino here and you win it big, generally, that’s tax-free. But there’s an important exception here, and that’s what this case was dealing with. And the case was an appeal actually by three different people who all knew each other, sounds like they got along and maybe even spent time together, who all got seriously into playing poker, and in particular Texas Hold’em poker. And they weren’t just; they didn’t just sort of clean up one weekend at the casino. They had instead, it had become virtually their entire means of earning income. For example, one of them was playing 15 or 25, between 15 and 25 hours a week. They were, some of them were travelling around Europe. They took a four-month trip there and were playing poker and they earned enough money to cover all of their expenses in Europe. And a couple of them took a trip to Australia. They won a pile of money there and eventually for example. One of them purchased a home in Quebec for $225,000 home, cash paid for that. All earned from poker playing. Also then purchased a condo in Florida $360,000 USD paid for in cash. And it drew some attention and a review of how much they had earned and it was substantial. They were looking at the various taxation years, but for some of them for example, the years like in 2009 one of them earned $305,000 in poker, in 2010 $1.4 million, 2011 $1.9 million, 2012 $736,000.
Rob Buffam [00:06:19] We’re in the wrong career, Michael, yeah.
Michael T. Mulligan [00:06:22] You should, should go play poker, but. And so, and they didn’t pay tax on it. And they said, well, these are just winnings. I just happened to have been very fortunate. I’ve won these prizes and bets. And so the taxation people in Canada took a different view of it. And the reason there could be a disagreement there is that if you turn something into what amounts to a business activity, you then have what amounts to business income, not just a lottery win, or not just, hey, I got lucky and won the poker game with my buddy on the weekend. And so the legal issue becomes how do you parse up whether you are in the business of playing poker or whether you just were very fortunate in a number of, you know, betting enterprises. And one of the things that the Court, both the Court of Appeal and the Court that dealt with it initially looked at, is that poker is not just a lottery scheme. Certainly there is an element of randomness in it, but there’s little dispute that the outcome of a poker game is going to be the product of both the random cards that are drawn, but also the player’s skill. And the court pointed out that you know, for example anyone who pays any attention at all to people playing poker, is it’s now for example something that’s televised on sporting channels, right? You know, there aren’t too many television, you know televised, you know the shows about somebody going and buying a 649 ticket.
Rob Buffam [00:08:00] The one-armed bandits. You don’t think that no one would watch that, but there are, I think of there is, and I’m not knowledgeable about it, but I do think of there as being professional poker players.
Michael T. Mulligan [00:08:09] That’s right. And the reason you can be a professional poker player is that it involves an element of skill. It’s not just a matter of, hey, there are no professional slot machine players, there’s just nothing in it other than pulling a handle down and you’re going to lose, and so the court pointed out that these people, all three people here like, year after year, were generating substantial amounts of money, hundreds of thousands of dollars a year, year in and year out. Not something that’s going to occur if you’re just sitting at the slot machine. And so, one of the traditional ways that’s looked at is whether what you’re engaged in has a reasonable expectation of profit. That’s one way to approach it. But another way to approaching it, and it’s an alternative, is that if you engage in business-like behaviour, which is an interesting thing, and so they would look at things like, you know, how much time are you spending doing this? Are you doing it in a business-like fashion? You know, is this just some kind of a minor, you know, incidental pursuit on the weekend that’s going to be in that category of, well, a lucky win at the casino, I guess. But here they looked at how these people operated and they found that it was operated in a sufficiently commercial fashion. They were looking at their odds and making careful decisions about how they were betting and how they’re playing the game, that kind of thing. And so they upheld, the Court of Appeal did, the Federal Court of appeal, the decision that this was a business-like operation. That led to another interesting conclusion, which was also not overturned, which is if it’s that, if this is business income, then you also have the right to deduct losses and expenses, just like you would from any other business. And so the alternative position from these taxpayers was, well, okay, fine, if you don’t buy my argument that I’ve just repeatedly won various bets, they then said, well we should be able to deduct losses and expenses. Hey, we have to travel all over the world.
Rob Buffam [00:10:13] What’s good for the goose is good for gander. Yeah.
Michael T. Mulligan [00:10:17] Yeah. And so they had this list of expenses and times where they lost money. Now, I should say those figures, like for example, the one year, the $1.9 million, that year, losses were only $1,684. Pretty good poker player. In other years, for example: 2009, winning $305,000, losses $305. So it was almost a wash, other years though, like winning 736, loss is 215. And so big gains virtually every year, year in and year out, but they were allowed to deduct their losses, which is an interesting thing. You sure can’t go in and deduct the losing lottery ticket, so you go and purchase. That’s not coming off your income. But if you get into one of these things and you do have that reasonable expectation to profit or you’re engaged in a you know, business-like behaviour, you can turn what otherwise might not be taxable into taxable income. Similar issues have arisen with respect to things like principal residence houses, right? And there have been some changes around that. Generally, you don’t pay capital gains on the amount that your house goes up if it’s your principal residence. But if you’re a person who’s flipping houses, you could then have the business of renovating houses. And there have been some changes made to that for people that are holding them, in most cases, for a shorter period of time, so you can’t just turn over a house every year and pay no tax on the capital gain that would result from that. And in fact, if you’re doing that as a business, it’s going to turn into business income rather than non-taxable capital gains on a principal residence. The flip side of all of that, sometimes this will come up for people, is that you have somebody who’s trying to establish that there was some reasonable expectation of profit in order to be able to deduct losses, for example. And that will often come up in cases where people have “businesses” are things they’re claiming to be businesses and generating business losses, which have the appearance of being the opposite of this, which would be kind of a recreational activity. Classic examples of that would be somebody who says, hey, I’m going to buy a beautiful big sailboat and I’m going to claim this was for the purpose of chartering it. Oh, and it’s truly too bad each year I generate a giant loss on my sailboat, and I’d like to write that off. You can wind up with the opposite circumstance where you have no reasonable expectation of profit and eventually your effort to deduct your losses will wind up being denied on your income tax return.
Rob Buffam [00:12:54] Can I ask you Michael? I’m curious, so on this case, was it, was the decision very contingent on the, on the particular facts? Like if, if you or I, and I, anyone who’s ever played poker with me, the four times I’ve done it would can attest to the fact that I’m not good at poker, but if if if somebody who does not do it in a way that comes across seemingly as a professional activity. Would we still be subject to the idea that we would be forced to pay taxes if we got if we just purely got lucky playing blackjacks or poker one night?
Michael T. Mulligan [00:13:28] Probably not. And they gave an example of the whole kind of list of various things that we looked at when determining whether either you’ve got that reasonable expectation of profit, that’s a common way that it’s looked at, or whether you’re engaged in something that has sufficiently business-like elements to it. And here they listed things like, for example, that they were earning their entire living from it. It was their only source of income. They devoted almost all of their time to doing it. They were able to make a profit on a yearly basis, consistently and regularly, that despite being a bit of an unconventional lifestyle, they said, they did what they were doing in a business-like manner, playing to win, having strategies to do that, and engaging things like risk management considerations and all of that. And so you’re exactly right. If you’re the person who just lucks out at your buddy’s house on the weekend and earns some money at a poker game, you’re almost certainly going to be non-taxable. But if that turns into your principal source of income, you spend most of your time doing it, you’re travelling around doing it and consistently making a whole bunch of money doing it. You’re very likely to wind up in a circumstance where you’re engaged in a business-like activity, not just sort of a recreation on the weekend. So that’s really the dividing line, and it’s now, I suppose, the leading case on where that dividing line is in the case of somebody who’s playing Texas Hold’em poker.
Rob Buffam [00:14:58] Well, that’s super interesting. Well, we should probably take a quick break for a commercial, but we’re speaking with Michael Mulligan. His weekly segment is a criminal defence lawyer enlightening us on the latest interesting developments in the law. We’ll be back in a moment or two.
[00:15:11] COMMERCIAL.
Rob Buffam [00:15:11] And our guest at the moment is Michael Mulligan, a criminal defence lawyer with Mulligan Defence Lawyers, who was just talking about the fact that a recent Supreme Court of Canada decision not to hear an appeal means that if you are a professional gambler, expect to pay taxes. But if you happen to be a basement, occasional gambler who gets lucky in poker, you’re probably still going to be able to keep your winnings without paying auto off. Michael, thanks for doing this. Thanks for being on the show.
Michael T. Mulligan [00:15:38] Hey, no trouble, always a pleasure to be here, you know?
Michael T. Mulligan [00:15:41] Yeah, well tell us there’s another case that caught your eye and as I understand it, it relates to this expectation of having a trial heard within reasonable time and something that many of us would wonder about. We’re hearing the courts are so busy, scheduling gets difficult, but that sometimes results in a trial not being heard within a reasonable time that can lead to outcomes where, I think, the public gets upset when they hear, oh geez, this person accused of a worrisome heinous crime gets off without having a trial.
Michael T. Mulligan [00:16:11] And I think that’s a reasonable thing, right? And I should say there’s lots of authority around this as well. Delay in criminal cases is really bad for all people involved, not only the community, complainants in cases, accused people in cases. It is really not satisfactory. And as with, I guess, many things in the public world, you wind up often with resourcing kind of at the state of what do we possibly get away with. That seems to be the threshold. And this particular decision that just came out is a follow-up on a Supreme Court of Canada case that came out in 2016 called Jordan. And that case and the most recent one both address this constitutional right to have criminal trial occur within a reasonable period of time. And prior to that Jordan decision in 2016, that concept of what was a reasonable period of time was not crisply defined and what that meant. Really two things. One, as the Supreme Court of Canada pointed out in that Jordan decision, that it led to a what they described as a culture of complacency. So nobody really, you know, leaning into, hey, we’ve got to get this thing done. When’s the deadline? Without a deadline, it can be hard to motivate people to get on with something. But in addition, you end up with a bunch of time being spent arguing about whether something was too long or not. Then when we don’t have enough judges or courtrooms or court clerks or sheriffs or anything, every day you spend arguing about when something was too long or not is a day you could have spent doing something meaningful, getting on with the substance of the case. And so, decisions about whether something was within a reasonable period of time. Used to rely on a bunch of evidence about things like, you know, was the person laying awake at night over this thing, or were they really stoic, or did they get fired from their job, or was their employer very understanding, or things of that sort, right, which can you can imagine how hard it can be to wrap your arms around how a particular judge is going to come to those decisions.
Rob Buffam [00:18:26] A little bit subjective too, I suppose.
Michael T. Mulligan [00:18:29] Absolutely subjective and individualized which just takes time. Anytime you have an individualized thing with uncertainty and no actual deadline it’s going to take time to sort out. And so in Jordan, what the Supreme Court of Canada did was to set presumptive ceilings, kind of a hard deadline. And if you go over it, if you don’t get it done, presumptively, that’s it. The case is going to be stayed, can’t proceed. Now those deadlines for cases in provincial court were 18 months. And in Supreme Court, where you might also have to have a preliminary inquiry, like another hearing before the actual trial, the deadline was 30 months. Now, a few things just to mention off the bat. First of all, the time doesn’t start running until the persons actually charged. Like, if it takes some time to investigate a file and the person hasn’t been charged, that time doesn’t’ count. Also, and the reason for that is the language as a person charged with an offence as a right to a trial within a reasonable period of time. Also delay than an accused person might cause they can’t then complain about the person can’t drag their feet or do unnecessary things or slow things down and then complain it didn’t get on that does not count either. Okay. But where you just don’t get it done and it goes over that threshold, presumptively that’s it, and the case won’t be allowed to proceed. So it gives everyone a hard deadline to get it done. Now, the safety, or not, one of the exceptions to that is the Supreme Court Canada in Jordan spoke about exceptional circumstances that can excuse a case that goes over that limit. And exceptional circumstances could include, you can imagine all kinds of things in human affairs, like COVID strikes and the courthouse gets shut down or the judge has a heart attack, or somebody gets sick and can’t proceed, the Crown Counsel gets the flu, it can’t go ahead. Those kinds of delays would also not be counted as exceptional circumstances. But this case that just came out was dealing with the issue of what about exceptionally complicated cases? And this one was a person; it was like a major drug investigation where you had like 15 accused people and multiple trials and thing being like multiple hearings for different groups of people with huge amounts of disclosure material. And the whole thing took 18 months and four days. This makes it very complicated.
Rob Buffam [00:20:55] Yep.
Michael T. Mulligan [00:20:55] And so the Supreme Court of Canada here found that that kind of a case can be exceptionally complicated and that can be one of those exceptional circumstances like the courthouse burning down or a pandemic striking or somebody having a heart attack. That can justify a case going over that time limit. And the way it works is that, first of all, the Crown would have to show, whereas going over the time limit, that it was particularly complex, a large number of people, huge amounts of evidence, just inherently very complicated. Second, the Crown has to show they took reasonable steps to try to get it done on time. And then finally, you would have to have a look at to see whether the amount that went past the deadline was reasonable given all of those things. And so on that basis, the Supreme Court of Canada said, in this circumstance, 18 months and four days is fine, you can carry on. But they were also careful to say the deadline’s the deadline, and we’re not rolling back to the period of time when, you know, sort of complacency was the order of the day. And so there is a bright line, and there is deadline. And one of the things that hopefully causes is for when you’re deciding about resources, how many judges and sheriffs and so on a Crown are we going to have? You can point to it and say, there’s a deadline, we got to get it done, and if you don’t have enough of those people, you better appoint some more or hire some more. Otherwise, the cases aren’t going to get to trial. So they didn’t retreat from having the clear endpoint, but they did provide some further detail about when a really exceptional case can be justified going slightly over that timeline. So that’s the latest from the Supreme Court of Canada on trials within a reasonable time and how we’re supposed to apply that Jordan deadline to keep everything on track and on time.
Rob Buffam [00:22:41] Michael Mulligan, thank you for being on the program. Thanks for explaining the significance of both those Supreme Court of Canada cases.
Michael T. Mulligan [00:22:48] Thanks so much. It’s always great to be here.
Rob Buffam [00:22:50] That was Michael Mulligan, criminal defence lawyer with Mulligan Defence Lawyers. We’ll take a quick commercial break and be back in a moment.
Automatically Transcribed on June 16, 2026 – MULLIGAN DEFENCE LAWYERS