By Alex Drummond, Editor-in-Chief · July 19, 2026 · Fact-checked by Maya Chen · This article is analysis, not personal tax advice. Speak to a qualified Canadian tax professional before acting on cross-border considerations.
The United States Internal Revenue Service held a public hearing on Friday, July 17, 2026, on the implementation of the new gambling-loss deduction cap under the One Big Beautiful Bill Act, or OBBBA. Ten of the twelve professionals scheduled to speak attended, and all ten opposed the cap. The provision, which took effect in January and was passed by Congress last year, caps deductible gambling losses at ninety per cent of gambling winnings, with the practical effect that a poker player who nets zero across a tax year (identical winnings and losses) still pays tax on ten per cent of gross winnings. The professionals speaking against the change framed it as an existential threat. Rep. Dina Titus, the Democratic congresswoman from Nevada whose remarks opened the hearing, called it "phantom income" that will "inevitably drive players towards offshore and unregulated markets."
For an Ontario audience, the OBBBA controversy raises a question the Canadian tax system has quietly answered for decades: what is the actual tax treatment of a professional poker player in Canada? The current settled state of the law, following the Federal Court of Appeal's 2025 decision in Fournier-Giguere v. Canada (2025 FCA 112) and the Supreme Court of Canada's refusal to grant leave in June 2026, is that Canadian recreational poker winnings are non-taxable windfalls, while Canadian professional poker winnings, when the activity constitutes a commercial business with sustained profitability, systematic organization and financial reliance, are taxed as business income under the Income Tax Act. That treatment differs materially, and for the segment of US pros considering a Northern move, favourably, from the new US regime.
The OBBBA Cap, in Brief
Under the pre-OBBBA regime, US taxpayers could deduct gambling losses against gambling winnings up to the amount of winnings. A player who won and lost the same dollar figure across a tax year owed no federal tax on the poker activity. Under the OBBBA regime, losses are deductible only up to ninety per cent of winnings, meaning even a break-even year generates a taxable amount equal to ten per cent of gross winnings. For a high-volume tournament professional whose annual gross may run into the millions, this is not a marginal calculation.
Rep. Titus at Friday's hearing framed the issue in principle terms. "For decades the tax code allowed taxpayers to deduct gambling losses up to the amount of their gambling winnings," she said. "This reflected a straightforward principle: taxpayers should be taxed on their actual net income, not on money they never really earned. Taxing phantom income is inconsistent with sound tax policy and with the fundamental principle that the tax code should measure economic gain." She warned that the cap "unfairly burdens professional gamblers and casual players alike, and will inevitably drive players towards offshore and unregulated markets."
Poker author Sara O'Connor added that the tax "punishes volume and honesty" and told the panel, "Phantom gambling income is not true income." Poker content creator Joshua Thatcher, better known as PLO Professor, warned that the change "encourages more illegal behavior" and predicted an "overall negative impact" across various gambling industries. Poker Fraud Alert founder Todd Witteles recommended that the IRS postpone implementation to allow more study time. Longtime poker pro Katie Stone noted that she and her family moved out of the US after Black Friday in 2011, referring to the April 15, 2011 US Department of Justice enforcement that shut down major US-facing online poker sites.
The Canadian Baseline, in Full
Canadian tax law approaches gambling winnings through a different analytical framework. The starting rule is that recreational gambling winnings, including poker, are non-taxable windfalls under the Income Tax Act. The Canada Revenue Agency (CRA) does not require a taxpayer to declare a poker cash from a Sunday major or a tournament bink at a Toronto casino as income if the activity is recreational.
The exception is the "carrying on a business" test. Since the Federal Court of Appeal's 2025 decision in Fournier-Giguere v. Canada, upheld when the Supreme Court refused leave in June 2026, the test has been substantially clarified. A poker player crosses from recreational to professional (and their net winnings from non-taxable windfall to taxable business income) when the totality of the activity meets a fact-specific set of indicators: sustained profitability across multiple tax years, systematic organization of the player's approach including bankroll management and study, financial reliance on poker as a primary livelihood, and consistent commerciality including record-keeping and business-like operations. A player who plays part-time, does not rely on poker for primary livelihood and does not treat it as a business retains the recreational-windfall treatment even if a single-tournament cash reaches six or seven figures.
The practical implication for a US professional considering a move is that the Canadian tax treatment on a variable-income year is materially more favourable than the OBBBA cap regime. A US pro whose net-of-losses income is $0 pays US federal tax on ten per cent of gross winnings. That same player, if resident in Canada and treated as a Canadian professional under the Fournier-Giguere framework, is taxed on their net winnings, which in a break-even year is zero. If the same player is treated as recreational under the Canadian framework, the winnings are wholly non-taxable.
Ontario's Regulatory Position for a Migrating US Pro
Ontario is not the only Canadian option for a US professional considering relocation. British Columbia, Alberta and Quebec each have their own regulated (or Crown-operated) online poker landscapes. What differentiates Ontario is depth. Ontario's regulated peer-to-peer poker market, live since April 2022, currently includes six regulated operators serving Ontario residents: GGPoker Ontario, PokerStars Ontario, 888poker Ontario, BetMGM Poker Ontario, PartyPoker Ontario and Bwin Ontario. Ring-fenced provincial pooling means Ontario tournament fields carry meaningful depth, and the Ontario Court of Appeal's 2025 ruling affirming that international pooling can be lawful under a "conducted and managed" framework has opened a path to further depth still.
Ontario's tax framework, as a provincial layer, aligns with the federal Fournier-Giguere framework. Ontario has no separate provincial recreational-gambling tax on winnings distinct from federal treatment. A US professional relocating to Ontario would face:
- Federal Canadian tax residency, on either the "resident" or "deemed resident" basis, under the Income Tax Act.
- Provincial Ontario tax residency if the primary residence and centre of vital interests is in Ontario.
- Federal tax treatment under the Fournier-Giguere framework for net poker income, if the activity meets the "carrying on a business" test.
- Provincial Ontario tax on the same net poker income, using the same "carrying on a business" test at the federal level.
- Applicable US-Canada tax treaty relief on double-taxation issues, subject to individual filing.
Historically, US professionals with Canadian tax residency have most often located in Toronto (deep Ontario field, GGPoker headquarters presence for the Canadian market), Montreal (Playground Poker at Kahnawake, historical French-language poker culture) or Vancouver (Pacific Time zone alignment with California grinders, deep tournament fields at River Rock and Cascades). Toronto is currently the deepest online field of the three, and Ontario's regulated framework, unique in Canada in its scale and its clean split between provincial regulator and provincial Crown agency (the AGCO and iGaming Ontario), makes it the most operationally attractive.
| Scenario | US pre-OBBBA | US post-OBBBA (from January 2026) | Canada (Fournier-Giguere framework) |
|---|---|---|---|
| Break-even year (equal winnings and losses) | $0 tax | 10% of gross winnings taxable | Recreational: $0. Professional: $0 (net is nil) |
| Net positive year (professional) | Tax on net | Tax on net, but 10% of gross floor | Tax on net as business income |
| Net positive year (recreational) | Tax on net | Tax on net, plus 10% gross floor | Non-taxable windfall |
| Large one-off cash for casual player | Fully taxable | Fully taxable, plus loss cap | Non-taxable windfall |
| Multi-year sustained pro income | Business-income treatment | Business-income treatment, plus loss cap | Business income under Fournier-Giguere test |
Illustrative table. Actual tax outcomes depend on individual facts including deductibility of business expenses, withholding treaties and provincial rules. Not personal tax advice.
Historical Precedent for US-Canada Poker Migration
Cross-border poker migration is not theoretical. The 2011 Black Friday enforcement effectively made online poker unplayable in the US for a generation of professionals, and Canada absorbed a meaningful cohort of that displaced group. Toronto, Montreal and Vancouver hosted established grinders through the intervening decade. Isaac Haxton, Jason Somerville, Dan "Jungleman" Cates and other US-born professionals lived in Canada for stretches during and after the Black Friday period, drawn by both regulatory availability and by Canada's more favourable treatment of poker winnings.
The OBBBA cap is a smaller shock than Black Friday, but it targets a different economic vector. Where Black Friday closed the online rooms, the OBBBA cap raises the effective tax burden on professionals who never leave the US. Rep. Titus's warning that the tax will "inevitably drive players towards offshore and unregulated markets" acknowledges what is empirically defensible: at the margin, professional players relocate to jurisdictions that price their activity more fairly. Canada is the jurisdiction that has historically absorbed the largest share of that flow, and Ontario is the province that currently offers the deepest regulated framework within Canada.
Implications for Ontario
What does a potential US-pro inflow mean for Ontario's regulated poker market? Three things.
First, on the operator side, a modest but material tail of higher-volume grinders migrating to Ontario would raise average lobby depth and volume across the regulated peer-to-peer sites. That is a modest positive for operator economics and, in the medium term, for provincial iGaming Ontario revenue-sharing under the operator-agreement framework.
Second, on the tax side, iGaming Ontario's fiscal footprint would grow via operator revenues, but individual taxpayers who relocate would be filing federal Canadian tax under the Fournier-Giguere framework. That means the CRA, and not the Ontario Ministry of Finance, sets the analytical framework for whether a given migrating pro is treated as recreational or professional. The individual determination is fact-specific.
Third, on the regulatory side, the AGCO and iGaming Ontario would need to ensure that a US professional relocating to Ontario meets the "physically located in Ontario" verification threshold that governs all peer-to-peer play on the province's regulated sites. New Ontario residents are eligible to register at 19 and above, with location verification through the standard Ontario-registered operator KYC process. Players must be 19 and physically located in Ontario to register.
The Bottom Line
For Ontario players, nothing changes in the immediate term. Ontario's regulated online poker market continues to run under iGaming Ontario, the province's stand-alone Crown agency, and Canadian tax treatment of recreational winnings remains the non-taxable windfall standard that has anchored Canadian gambling jurisprudence for generations.
What may change over the next twelve to twenty-four months, if Rep. Titus's warning is empirically borne out, is the composition of the Ontario regulated peer-to-peer field. If a segment of US professionals relocates north in response to the OBBBA regime, Ontario absorbs the deepest share of that inflow. That is not a certainty. It is a possibility that Ontario's regulatory posture is uniquely positioned to accommodate.
The IRS's decision on postponing or clarifying the OBBBA implementation, following Friday's hearing, is expected in the coming weeks. Coverage on this site will track it, and will follow up with a detailed Ontario tax primer for professional and recreational players in a companion piece scheduled for the fall.