Hmmm - I could be wrong! You got me interested so I had a look at the ATO Legal site to see if there was any information on this and is at least one case where people have been found to be carrying on a gambling "business" and therefore been liable for tax!
There is a ruling from 1991 which makes interesting reading for those interested:
http://law.ato.gov.au/pdf/it2655.pdf
Basically this concerned three cases that went before Federal Court - in all three cases the taxpayer won and was found not to be carrying on a business. Some interesting points from the judges decisions as to why the people were not carrying on a business:
In the first case the fact that person did not have an office, did not keep records, did not use a computer and did not subscribe to tipping service, bet on exotic bets and bet with the TAB rather than bookmaker was "inconsistant with the money-making, systematic and business like character essential to carrying on a business.
The second case the punter used judgement and instinct rather than following a fixed betting system. The judge in this case commented that "the intrusion of chance into the activity as a predominant ingredient ... suggests that it will be a rare case where a court will conclude the activity is a business.
The third case stated gambling as conducted by the public would seldom be a business even where large gains or losses are involved. It did mention that if person was involved in other racing activities (eg. training, breeding or horse ownership) then the gambling was more likely to be a part of that business.
Based on that ruling you would be fairly confident that gambling is not a business. But there was a later case (number CDS10095) which found that gambling was a business for a particular taxpayer. The reasons for this were:
1. Taxpayer had no other identifiable source of money except his racing activities.
2. Taxpayer spent most of his time at various racetracks
3. Taxpayer had inside information from trainers and owners
4. Taxpayer owned a greyhound
5. Taxpayer placed bets for some trainers adding to his inside knowledge
6. His activities were more considerable, systematic and organised than a mere punter.
So it seems gambling can be assessed as a business but only in limited circumstances so if you are successful make sure you dont own a racehorse/greyhound, don't rely on inside information, don't spend all your time at the track and keep some other source of income as well!
Hope this is helpful to you.