Finland's Supreme Administrative Court has ruled that a professional bettor may deduct the stakes on losing bets, not only on winning ones. The decision was published on 1 October.

The figures in the case are worth reading closely, because they describe a customer every trading desk recognises.

In 2020 the bettor placed 2,145 bets with operators outside the EEA. He staked 365,606 euros and received 406,713 euros back, a profit of about 41,100 euros on an eleven per cent return. He had supported himself and his family on betting since 2010, working 50 to 100 hours a week at busy periods and 30 to 50 in quieter ones, concentrating on Finnish football and looking for mispricing in bookmakers' odds.

The Tax Administration had allowed him to deduct only the stakes on bets that won. On that basis it added more than 112,000 euros to his earned income for 2020 and imposed a tax increase of 1,154.60 euros.

The Court annulled the adjustment. He may deduct all 365,606 euros, the tax increase is removed, and the Tax Administration was ordered to pay his legal costs in full.

What the Court actually decided

Not that the activity was a business. The Court specifically held it was not.

It held that the activity was income-acquisition activity under the Income Tax Act, because success rested on research and knowledge of betting markets as well as on chance, and because the activity was extensive and systematic.

The reasoning that matters is this: betting can be assessed as a whole directed at acquiring income, rather than bet by bet as a series of unconnected events.

Miika Härkönen, the tax lawyer who assisted the bettor through Verotieto Oy, points out that this already applied to poker, where play has long been accepted as income-acquisition activity with losses deductible. Chance is present in betting in the same way it is in poker. The ruling brings betting into line.

Anyone previously taxed on the basis that losing stakes were not deductible may seek rectification. The deadline is generally three years from the start of the year following the tax year.

Why this is a licensing story

The case concerned bets placed outside the EEA, and that is not incidental. It is the whole reason there was tax to argue about.

Finnish tax law exempts winnings from gambling organised within the EEA and taxes winnings from outside it. The bettor was taxable because of where he bet, not because of how much he won.

From 1 July 2027 that boundary is redrawn around licensing rather than geography. The line that determines whether a player's winnings are taxable becomes a line the Finnish regulator draws, and the question of what is deductible on the taxable side of it has just been answered.

The channelisation consequence

Here is the part that cuts against the direction of the reform.

Before this ruling, a Finnish professional betting outside the permitted zone faced tax on something close to gross winnings, because only winning stakes were deductible. On the figures in this case, that produced a tax bill on 112,000 euros of notional income from 41,100 euros of actual profit. That is a punitive outcome, and a powerful reason to move to a book whose winnings are tax-exempt.

After this ruling, the same bettor is taxed on something much closer to real profit. The tax penalty for betting outside the licensed perimeter has fallen substantially for anyone who can show the activity is extensive and systematic.

It does not disappear. Exempt is still better than taxed at earned-income rates, and the administrative burden of documenting 2,145 bets is real. But a tax wall that was close to prohibitive for professionals is now merely a disadvantage, and that is a change in the economics of channelisation that no policy paper anticipated.

It applies to a small group. That group also happens to be the one that stakes the most.

What a trading desk should take from this

The customer described in this judgment is a sharp bettor hunting pricing errors in Finnish domestic football, at volume, as a full-time occupation.

Three things follow for anyone pricing Finnish sport from July 2027.

  • Finnish domestic markets have been thin enough to beat. A bettor sustained a family on finding mispricing in them for a decade. With dozens of licensed books pricing the same leagues, that edge narrows, but the first operators into those markets will be offering prices into a population that includes people who have made a living from exactly this.
  • Sharps are now identifiable by law. Finland requires identification on every licensed account. There is no anonymous play. A professional bettor cannot be anonymous in the licensed market in the way he could offshore.
  • Account restriction becomes a visible policy. Limiting or closing winning accounts is standard commercial practice and contested in several jurisdictions. In a market built explicitly around player protection, mandatory identification and a national self-exclusion register, an operator's restriction policy is more visible to a regulator than it is elsewhere. Finland has published nothing on this, which is not the same as having no view.

What we do not know

  • Exactly how player winnings will be treated for tax from 1 July 2027, and whether the exemption attaches to a Finnish licence, to EEA licensing, or to both. We have not seen this set out definitively and are not going to guess.
  • How many bettors are in a position to use the rectification route.
  • Whether the Tax Administration will issue guidance on what counts as extensive and systematic.
  • What the second gambling tax case decided this autumn means for recreational online players, where reporting indicates losing stakes are deductible only to a limited extent.