If you live in a country where taxes must be paid on income whether it be from gambling, trading, or cashing out btc from sig pay and you don't pay your taxes, you can be subject to jail time and massive fines with interest. Ultimately it depends on the tax laws in your country, but the penalties can be serious.
I live in that kind of country. And, yeah, I can be subjected to jail time and fines. Those are indeed serious penalties. Fortunately, however, the government, its tax bureau, isn't serious at all in its implementation. Or perhaps it's about incompetence.
Having said that, I have not paid any taxes on my gambling winnings, whether online or offline. Even brick-and-mortar casinos here don't deduct withholding taxes from winnings. I also often go to regulated cockfighting arenas where people place millions in bets. Some go home a lot richer, but nobody from the tax department made sure they've paid the appropriate taxes.
