If the U.S. taxes lotteries, your friend would most likely be taxed on Canadian lottery winnings. Your government tries to tax its citizens on earnings even when they leave the country. Canada and the U.S. have an agreement where under certain conditions, the country where the person resides for the longest part of the year get to tax the individual. Your friend would have to work in Canada for more than half of the year to be under the Canadian tax system to be eligable for a Canadian tax exemption on lotteries. If he was able to move to Canada and it looked like the move was simply for tax avoidance, your government would still be looking for their money.