With massive jackpots that are often much larger that those offered by Canadian lotteries – including tonight’s $1.5 Billion USD Powerball lottery draw – it’s no surprise that more and more Canadians are flocking to play U.S. lotteries.
To help Canadians interested in playing U.S. lotteries, we've created the following guide that includes everything you need to know about U.S. lottery taxes, legal rules and purchasing options for Canadian who want to buy U.S. lottery tickets.
What is Powerball and How Does it Work?
Powerball is the most popular lottery in the United States and is played in 44 states, Washington D.C., Puerto Rico and the U.S. Virgin Islands.
Powerball tickets cost $2 USD each and sales cut offs are generally 59 minutes before the draw, with some states enforcing earlier cut off times.
In order to win the Powerball Jackpot, you must match all 5 white balls in any order AND the red Powerball (there are 69 white balls and 26 red balls). The second prize of $1 million USD is won by matching all 5 white balls in any order, without the red Powerball.
Are Canadians Allowed to Win U.S. Lotteries?
Yes, Canadians are allowed to play and collect Powerball Lottery prize winnings. The same applies to many other U.S. lotteries, but it’s best to check with the state lottery corporations that operate these lotteries first, just to be sure.
What are the Tax & Legal Rules for Canadians who Play U.S. Lotteries?
- Taking Your Lottery Ticket Outside the U.S.: An obscure U.S. law that prohibits entering the United States with a lottery ticket has been getting a lot of attention lately among Canadian would-be Powerball players
Technically, it is illegal to enter the United States with a lottery ticket, which means that Canadians who purchase Powerball tickets in the U.S., bring them to Canada and then try to re-enter the U.S. with their tickets could be committing an illegal act and have their tickets seized, which in fact has happened – although the lottery tickets were eventually returned to the purchaser.
The law reads as follows: "all persons are prohibited from importing into the United States from any foreign country any … lottery ticket, or any printed paper that may be used as a lottery ticket, or any advertisement of any lottery."
The only exemption applies to “any lottery ticket, printed paper that may be used as a lottery ticket, or advertisement of any lottery, that is printed in Canada for use in connection with a lottery conducted in the United States.” Unfortunately, this exemption would not apply, as Powerball tickets are printed in the U.S., not Canada.
However, a recent statement from a Washington State lottery official on this issue should give some comfort to Canadians who bring their U.S. lottery tickets back to Canada and are lucky enough to hit the winning Powerball numbers. According to the official, the state lottery is willing to work with winners who have border crossing issues to ensure they receive their prizes. You can read more here.
If you are still concerned about having your Powerball tickets seized, you can always leave your U.S. lottery tickets in the United States by renting a mailbox or having a friend in the U.S. keep it for you, just make sure it’s someone you trust with your life (or your jackpot)!
- Taxes – United States: Canadians who win the Powerball lottery (or any other U.S. lottery) will have to pay 30% of their winnings in Federal U.S. taxes. Some states also collect income tax on lottery winnings, but others don’t (for example, Washington State doesn’t tax lottery winnings, but New York State charges a tax of 8.82%)
- Taxes – Canada: Canadians don’t have to pay tax on their U.S. lottery winnings in Canada, as lottery winnings are exempt from taxation under section 40(2)(f) of the Income Tax Act of Canada
- Redeeming Winning tickets: If you are lucky enough to have the Powerball winning numbers, you must redeem your winning ticket in the state in which it was purchased
- Anonymity: Just like in Canada, it is unlikely that you will be able to remain anonymous if you win the Powerball lottery (or any other U.S. lottery). There are only 6 U.S. states that allow lottery winners to remain anonymous, with the only border state being North Dakota.
How Can Canadians Buy Powerball and other U.S. Lottery Tickets?
Tickets purchased directly from authorized U.S. state lottery retailers must be purchased in person. Canadians who plan on crossing the border to purchase Powerball tickets in person should be aware that you can only buy Powerball tickets using cash or debit, so plan accordingly.
While you can’t purchase Powerball tickets online directly from U.S. state lottery corporations, Canadians can buy Powerball tickets online through concierge services that will buy tickets on your behalf. Keep in mind that none of these services are sanctioned by or endorsed by Powerball.
If you do decide to go this route, make sure you do you homework and buy from a legitimate, reputable online lottery ticket purchasing service to avoid scams and fake websites. You can learn more about how to choose a reputable online lottery ticket concierge service here.
The Bottom Line
Canadians are definitely eligible to play and win Powerball, as well as many other U.S. lotteries. Just make sure you know the tax and legal rules ahead of time and purchase your tickets from a reputable source in case you hit the jackpot!