In Finland, the Supreme Administrative Court ruled that professional sports betting qualifies as an income-generating activity for tax purposes. This allows a bettor to deduct €365,606 in stakes placed with betting operators outside the European Economic Area.
The ruling follows a recent Court decision on taxing online gambling outside the EEA. In that case, the court allowed a broader assessment of connected gambling, allowing stakes from losing games to be deducted from taxable winnings. The latest case addresses a related issue but focuses on pro sports betting and whether it qualifies as an income-generating activity.
In its ruling, the Court concluded that the bettor’s activity was not a business activity. Nevertheless, it said it constituted an income-generating activity under Finland’s Income Tax Act. The court noted that the bettor’s results partly depended on chance but also on his research and knowledge of the betting market.
Pro Betting Recognised as Income-Generating Activity
The case involved a bettor whose focus was mainly on Finnish football matches and used information gathering and analysis to identify pricing errors in bookmakers’ odds.
Therefore, the activity was extensive. During busier periods, the bettor spent between 50 and 100 hours per week on betting, while his workload during quieter periods ranged from 30 to 50 hours. It was reported that he relied on sports betting as his main source of income for several years.
In 2020, the bettor placed 2,145 separate bets with operators outside the EEA. His stakes totalled €365,606, while his returns reached €406,713. This resulted in a profit of €41,106, or the equivalent of a 13.33% return on invested capital.
In the case, the bettor argued that his ability to spot bookmakers’ pricing errors allowed him to achieve long-term profitability. Instead of relying purely on chance, he used research and analysis to identify favourable betting opportunities.
The Supreme Administrative Court acknowledged that both factors played a role, and found that his success partly depended on chance but also on his information gathering and knowledge of the betting market. The scale and systematic nature of the activity demonstrated a stable intention to generate income.
Bettor Wins Right to Deduct Stakes
It should be noted that the dispute began after the Finnish Tax Administration adjusted the bettor’s 2020 taxation.
It increased his taxable earned income by €112,369.48 and argued that stakes could only be deducted when they were directly connected to individual winning bets. At the time, stakes from losing bets could not be used to offset income generated by winning bets under the Tax Administration’s interpretation.
However, the bettor challenged the assessment and argued that his betting should be recognised as either a business activity or an income-generating activity.
Initially, in 2024, the Tax Adjustment Board rejected his appeal. Afterwards, the Helsinki Administrative Court upheld that decision. However, the Supreme Administrative Court has now overturned both decisions.
SAC’s ruling is that the consumer can deduct the full €365,606 in stakes placed on betting outside the EEA from his taxable earned income. It also confirmed a previously accepted €5,541 deduction for commuting expenses.
Therefore, the court concluded that the Finnish Tax Administration did not have the right to adjust the bettor’s taxation to his disadvantage. It also ruled that the tax increase imposed on him should be cancelled.
Court Rejects Business Classification
Despite the favourable tax treatment, the court did not go as far as recognising the betting activity as a business undertaking. It said that the bettor relied on betting services provided by different operators and that this did not constitute business or professional activity under Finland’s Business Income Tax Act.
However, this distinction did not prevent the activity from being classified as income-generating.
The court considered the bettor’s extensive workload, systematic approach, research and market knowledge alongside the element of chance. When all taken together, these factors demonstrated that he was pursuing a stable income-generating purpose.
Other Expenses Remain Under Review
But the latest ruling does not automatically make all costs claimed by the bettor deductible.
The Supreme Administrative Court returned the case to the Tax Adjustment Board to determine whether additional expenses were connected with generating or maintaining taxable income.
These include workspace costs, telephone and internet expenses, office costs, newspaper subscriptions, travel expenses, additional living costs during business trips and football match tickets.
The court also ordered the Finnish Tax Administration to pay €5,820 towards the bettor’s legal costs before the Supreme Administrative Court.
Clarity for Finnish Gambling Taxation
Overall, the two Supreme Administrative Court rulings serve as important developments in Finland’s stance on gambling taxation.
While the earlier decision addressed how connected online gambling activity should be assessed, the latest ruling specifically recognises systematic, knowledge-driven sports betting as income-generating activity, despite the role of chance.
For professional bettors, the decision is significant because it allows the stakes from the bettor’s activity to be deducted from taxable income rather than limiting deductions to individual winning bets.
