Can Canadians Buy Lottery Tickets in the U.S.?

Here at The Motley Fool, we believe that investing in stocks is a far better way to grow your wealth than buying lottery tickets. But … we also know that billion-dollar jackpots are enticing.

So let’s set aside our tried-and-true  investing philosophy just for a moment – to explore whether Canadians can play the lottery in the United States.

The short answer is yes. Canadians can legally buy U.S. lottery tickets, including Powerball and Mega Millions, but only under certain conditions. The most common way is to cross the border and buy directly from an authorized retailer in a U.S. state where the lottery operates. You do not need to be a U.S. resident or citizen to participate.

That said, the rules don’t stop at the point of purchase. Once you consider taxes, ticket redemption requirements, and third-party online services, things get more complicated. Let’s break it down.

Buying tickets in person in America

Cross-border sales of lottery tickets are common. During big jackpots, Canadians line up at convenience stores and gas stations near the border, sometimes making up the majority of sales. As long as you buy tickets from an official retailer, you’re playing by the rules.

One caveat: U.S. law prohibits mailing lottery tickets across international borders, but carrying them personally is not restricted. That said, Canadians usually need to redeem winning tickets in the same state where they were purchased, so be prepared to return in person if you win.

Third-party services

Because driving across the border isn’t always practical, Canadians often turn to lottery concierge services such as TheLotter. These companies buy physical tickets on your behalf in the U.S., scan them into your account, and hold the originals in safekeeping.

Another option is lottery betting, where you place a wager on the outcome without actually owning a ticket. Note that Powerball and Mega Millions do not endorse or guarantee these services. If you use them, you do so at your own risk.

Taxes for Canadians who win U.S. lotteries

Winning a U.S. lottery jackpot might sound like the ultimate dream, but for Canadians, the reality is more complicated than cashing a giant check. Cross-border taxation rules mean that a significant portion of your prize will be withheld before you ever see the money—and what’s left will depend on where you bought the ticket and how you report it afterward. Understanding how both the U.S. and Canadian tax systems treat lottery winnings is essential if you want to maximize what actually makes it into your bank account.

U.S. taxes

The moment a Canadian wins a U.S. lottery prize, the Internal Revenue Service (IRS) steps in. Non-U.S. residents face automatic federal withholding, and depending on the state where the ticket was purchased, there may be additional state-level taxes. This first layer of taxation can dramatically reduce your winnings before your money ever crosses the border, making it critical to know what to expect upfront.

1. Federal tax withholding
   
   • The U.S. Internal Revenue Service (IRS) automatically withholds 30% of lottery winnings for non-U.S. residents.
     
2. State taxes
   
   • Depending on where you buy the ticket, additional state tax may apply.
     
   • States like Washington and Florida impose no state income tax. Others, like New York, withhold up to 8.82%.
     
   • That means if you buy a winning ticket in New York, nearly 39% of your jackpot could vanish before you see a dollar (or a loonie).
     
3. Filing a U.S. return
   
   • Canadians who win may need to file a U.S. tax return (Form 1040NR) to reconcile withholding and, in some cases (such as gambling losses), reclaim part of the withheld tax.

Canadian taxes

While the Canada Revenue Agency (CRA) does not tax lottery winnings, it does tax what you do with the money afterward. Thanks to the Canada-U.S. tax treaty, double taxation is avoided, but future investment income from your winnings will be subject to Canadian tax rules. Knowing these details ensures you keep more of your windfall working for you.

1. No tax on lottery winnings
   
   • The Canada Revenue Agency (CRA) does not tax lottery winnings, whether from domestic or international lotteries.
     
2. Foreign tax credit
   
   • Canada’s tax treaty with the U.S. allows Canadians to claim a foreign tax credit for taxes already paid to the IRS.
     
   • This prevents “double taxation” if the winnings are ever classified as taxable income in Canada (for example, if structured in certain ways).
     
3. Investments post-winning
   
   • Once your winnings are in Canada, any income earned from investing that money — dividends, capital gains, or interest — is taxable. The lottery jackpot itself is tax-free in Canada, but what you do with it afterward is not.

Should you “invest” in the lottery?

Sure, it’s fun to think about winning a massive jackpot, but it’s crucial to remember that a lottery ticket is entertainment, not a good financial strategy. The odds of winning Powerball are staggeringly low: about 1 in 292 million. You’re more likely to be struck by lightning than to hit the jackpot!

On the other hand, consistently investing in quality stocks gives you a powerful advantage at gaining wealth. Historically, the stock market has rewarded disciplined investors with compounding returns, inflation-beating growth, and a much higher chance of building lasting wealth. If your goal is to retire early or grow wealth over time, buying stocks stocks is a far superior and much smarter plan that playing the lottery.  If Canadians want to make money in the U.S., we encourage investing in the S&P 500 instead (although the TSX Composite Index has been giving the U.S. markets a run for the money lately).

Motley Fool takeaway

Canadians can buy U.S. lottery tickets, but they should understand the rules:

• You can purchase tickets in person or through third-party services, though only official U.S. retailers are guaranteed.
  
• Taxes are unavoidable: 30% U.S. federal withholding plus potential state tax. Canada doesn’t tax lottery winnings, but it does tax future investment income.
  
• Treat lottery tickets as entertainment, not investment. If you’re serious about building wealth, history shows that the stock market offers far better odds.
  

So if you’re looking for fun, buy a ticket. But if you want to retire rich, build a diversified portfolio of great companies and let compounding do the heavy lifting.

How to play the lottery responsibly

If you choose to play, do it for the thrill, not as a way to build your future. Here’s how to keep your spending in check:

• Set a small, fixed budget, and treat it like any other entertainment cost.
  
• Never rely on the lottery for financial planning.
  
• Invest the majority of your money in diversified portfolios or long-term stock strategies — where the odds are actually stacked in your favor.

FAQs

Do Canadians pay taxes on capital gains earned from U.S. stocks?

Yes. Canadians must report and pay capital gains tax on profits made by selling U.S. stocks, just like with Canadian stocks. The U.S. does not tax capital gains for Canadian residents, but dividends from U.S. stocks are subject to a 15% withholding tax, which can usually be claimed back as a foreign tax credit in Canada.

What amount of lottery winnings go unclaimed?

Each year, roughly 1% of lottery prizes go unclaimed, according to New York Lottery data. While that may seem small, given the volume of tickets sold nationwide, it adds up to over $1 billion in unclaimed winnings annually.

Are Canadians taxed on U.S. lottery winnings?

Yes. The U.S. automatically withholds 30% federal tax on lottery winnings for non-residents, and some states add their own tax on top. Once the after-tax winnings are brought back to Canada, the CRA does not tax the prize money itself. But if you invest the prize money, any investment gains from it will be taxable.

Can I remain anonymous if I win the lottery in Canada?

Usually no. Most Canadian lottery corporations require winners’ names, photos, and locations to be made public for transparency and fraud prevention. A few exceptions exist, but anonymity is very limited compared with some U.S. states.