David Walsh ... facing demands from the Australian Taxation Office that he repay $37 million in profits from the wildly successful gaming system.

''It's a bill that I can't pay'' ... David Walsh.

Fears that Australia's hottest art gallery could close have created a social media outcry as the Tax Office goes after the eccentric gaming mogul and art collector behind Hobart's MONA collection.

David Walsh, founder of the Museum of Old and New Art, is facing demands from the Australian Taxation Office that he repay $37 million in profits from the wildly successful gaming system he created.

The ATO need their heads examining. Don’t they realise that David Walsh has brought a truly world class art museum to Tasmania? 

MONA, lauded by many as a cultural icon, has become a tourism boon for debt-ridden Tasmania since it opened in January last year. Mr Walsh told Fairfax this month that MONA's position would be "precarious" if the dispute went to court and he lost.

He and associate Zeljko Ranogajec made their fortunes by developing a betting system that uses complex mathematical algorithms to place thousands of bets just before a horse race starts.

A Facebook campaign backing Mr Walsh and orchestrated by social scientist Ross Honeywill has drawn more than 3000 supporters and high-profile backing from personalities including blogger Marieke Hardy and former Greens leader Bob Brown.

The office recently ruled that Mr Walsh and others were running a $2.4 billion gambling business. Mr Walsh is contesting the claim and will be in court next month to fight paying the tax bill, plus interest, calculated from the years 2003 to 2006.

Today, Mr Walsh confirmed to Fairfax that he wanted to negotiate a resolution with the ATO, and outlined plans for MONA's future.

"It's fair to say, the ATO, although it's a statutory body, is a representative of government," Mr Walsh said. "And it's not in the interests of anybody to mess with MONA."

The $180 million museum has drawn 600,000 visitors in its first 18 months - at the high end of even Mr Walsh's expectations.  It won the 2012 Australian Tourism Award for best new development, and is Tasmania's single most visited attraction.

The Facebook campaign page has been inundated with messages of support and posts condemning the Tax Office's move.

"MONA is the most important philanthropic contribution to Australia in decades. David Walsh should be adorned with congratulations and praise from our government, not shadow taxes!" wrote Christos Linou.

"The ATO need their heads examined. Don't they realise that David Walsh has brought a truly world class art museum to Tasmania? MONA is being recognised on an international level now and with that an interest in Tasmania. How short-sighted can the ATO be?" wrote James Speed.

Mr Walsh, who has his own two-bedroom apartment hidden inside the MONA building, developed the project without any government financial assistance. 

Instead he often relied on gambling wins, including part of a $17 million windfall in the 2009 Melbourne Cup carnival.

Now supporting more than 170 full-time equivalent jobs, he is finding around $8 million annually to keep MONA open.

"It's hard to put a finger on, but it probably costs $1 million a month to run, and we are getting a bit over $4 million annually in income," he said. "I would like to get it to be profitable."

Other philanthropists developing their own art ventures, such as the TarraWarra Museum at Healesville, chose to operate as not-for-profit institutions. But Mr Walsh said he rejected this option in setting up MONA.

"When it was under construction and I got into difficulty I could always sell an art work," he said. "But it's for that precise reason I didn't go down that [not-for-profit] path. You can't sell stuff from the collection, or if you can, it's very difficult."

But Mr Walsh has said there was only a small risk he would close MONA.

"It is my intention to support MONA ongoing - that has been the work of my life," he said this month.

"In saying that, the retrospective tax bill is not something that I can service. It is, in fact, more than 100 per cent of the money I've made. But I expect a negotiated settlement. I'm not just saying that - I fully expect to get an outcome."

Until now, gambling winnings in Australia have seldom been taxable. Sydney University tax expert, Michael Dirkis, said the ATO had been fairly silent on them since losing three cases in the 1980s.

A potential downside for the Tax Office was that if people were treated as professional gamblers they might claim gambling losses, Professor Dirkis said.

"Picking winners is not really the way you want to run a tax system."

Mr Walsh said he didn't mind being the first. 

"I just don't want to have to do it retrospectively."

The case is due to come up for scheduling before tax specialist Justice Richard Edmonds in the Federal Court in Sydney next week.

"I intend to win the argument, in court if necessary," Mr Walsh said.  "But my solicitors tell me that these things are usually resolved."

Professor Dirkis said that what made the case widely interesting was Mr Walsh's community generosity.

"Despite all the successful entrepreneurs we have in Australia, none of them seem to have given that level of money back to the community," he said.

The director of the Tasmanian Museum & Art Gallery, Bill Bleathman, said the "MONA effect" had fundamentally changed the approach to the island state.

"People are talking about Tasmania like it's a new promised land," Mr Bleathman said. "It's a shining light to other philanthropic interests in Australia and around the world."

Mr Walsh said he had been staggered by the level of public support.

"I didn't expect to make so many people happy," he said.