Interesting why you VWM
get taxed on everything except gambling in the U.K. How do you suppose that came about? Oh I know, Monaco? nope wrong family.
The UK has always taxed at source, rather than relying on us to tell the taxman what we have earned, and pay it at the end of the year. Taxes ARE levied on gambling, but they are taken from the operators, who have to keep accurate records and forward the taxes to the revenue and Customs. Most UK citizens don't even have to submit a tax form as our taxes are dealt with by forcing employers to deduct them from our pay before we even see the money, this is the "taxation at source".
There has been a levy on horse racing bets, and this was taken by the bookmakers directly out of our stake or winnings - punters could even choose whether they wanted to pay a percentage of their stake, or of any payouts.
This has worked fine so far, and the government has not seen the need to make every citizen declare every gambling win, and calculate losses as deductions. The revenue simply could not cope, and it would probably cost more to implement than the tax it brought in.
I think the US taxed the gamblers because many of the casinos were run by the "mob" in the past, and they could not be trusted to collect the taxes on the activity on behalf of the government. Inertia means that they have left things as they are, even though the "mob" no longer has such a grip on the industry.
Although we do not get taxed on winnings, we also cannot take losses as deductions.
There IS an exception to this rule, and this is when you become a "professional gambler", and make a living by winning over the long term. This would apply to professional poker players, who WOULD have to pay tax on the earnings they make, and would be able to offset the entry fees, travel, etc as deductions.
Since online operators specifically prohibit professional gamblers from using their products, this situation should never arise in most cases.
This law is also exploited as a loophole by financial traders, because by spread betting on share price movements, rather than buying the shares themselves, their profits are tax free as this is considered gambling. Unless the revenue decide to mark you as a professional gambler, this works fine.
Where only luck is involved, the revenue have no prospect of claiming you are making a regular living, as in order to declare someone as a professional gambler, they have to show that they are using their skills to consistently beat the house, or other players. Hence, only Poker players tend to have to worry, along with a few horse race pundits who have demonstrated a long term ability to be able to skillfully interpret "form" and consistently outsmart the bookies.
Affiliates on the other hand, ARE liable to pay tax on any profits made from their websites, although the revenue grants a concession where the income is small, such as is the case for someone who just "dabbles" for a hobby, and has a main source of income, such as a job.