Gambling not taxed, judge says

Canada wanted to tax the gambling as a business.
TORONTO GLOBE AND MAIL
Brian and Terry Leblanc were once a couple of average guys, spending their days washing windows and their nights drinking beer and watching sports on TV.
In the late 1980s, the brothers won about 90,000 at Toronto's Woodbine racetrack and decided to put that money toward more sports betting. Within a few years, the Leblancs were managing a full-time betting operation from their home in Aylmer, Quebec, wagering up to 300,000 a week.
Their strategy was simple: bet huge amounts on events with incredibly long odds. Naturally, they lost most of the time, but, when they won, they won big. They pocketed 1.7 million three times -- on two bets in 1996 and one in 1999 -- and won about 5.5 million from 1996 to 1999. During that period, they wagered 52 million.
It wasn't long before the Canada Revenue Agency took note. In 2000, the agency sent them a notice of reassessment for the years 1996 to 1999, saying their gambling was a business and subject to tax.
The agency was convinced the men used a "system" to make bets and noted their operation included a computer program to manage wagers and as many as 15 paid helpers. The brothers denied using any system, saying they relied only on luck.
Who won
The case ended up at the Tax Court of Canada and, last week, Justice Donald Bowman ruled in favor of the Leblancs.
"It is true, they won but to say they won because they had a system has no basis in the evidence at all," Bowman said in his ruling.
"They won in spite of having no system. If one is looking for a pattern, it is that they bet massively and recklessly and in those games where they could, they bet on long shots."
The judge said the Leblancs were compulsive gamblers, but they were not running a business and their winnings were not taxable.