Tax Center

Prediction market taxes, explained.

Trading on Kalshi or Polymarket has real tax consequences — and, often, real opportunities. This is our plain-English library on how prediction-market gains and losses are taxed: what you owe, what you can claim, and how to keep records that hold up. No jargon, no hype.

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The basics

What every prediction-market trader needs to know — whether your winnings are taxable, what counts as a gain or loss, and how it gets reported.

• Arbitrage Betting Taxes: How Prediction-Market Arbitrage Profits Are Taxed

  Arbitrage betting profits are taxable in the US, but how depends on the facts: casual gambling income, a Schedule C business, or possibly Section 1256 capital. Here is how arbitrage betting taxes work and why characterization decides what you owe.

  June 21, 2026·

  • taxes
  • prediction-markets
  • kalshi
  • section-1256

• How to Track Your Prediction Market Trades for Taxes

  A practical guide to keeping clean Kalshi and Polymarket records for tax season: what to track, how to pull your trade history, and the record-keeping mistakes to avoid.

  June 20, 2026·

  • kalshi
  • polymarket
  • prediction-markets
  • taxes

• The OBBBA 90% Gambling-Loss Limit: What the New §165(d) Rule Means for Bettors

  Starting with tax year 2026, the One Big Beautiful Bill Act (OBBBA) caps the gambling-loss deduction at 90% of losses, so break-even bettors can owe tax on phantom income. Here is how the new IRC §165(d) rule works, who it hurts, and where prediction-market contracts may differ.

  June 20, 2026·

  • taxes
  • prediction-markets
  • kalshi
  • section-1256

• What Bettors Get Wrong About Taxes

  The most common tax mistakes sports bettors and prediction-market traders make — from "no 1099 means nothing to report" to neglected records — and what to do instead.

  June 20, 2026·

  • taxes
  • prediction-markets
  • kalshi

• What Is the Section 1256 60/40 Rule? A Trader’s Guide

  Section 1256 contracts get a blended 60% long-term / 40% short-term tax rate, mark-to-market, and a loss carryback — here is how the 60/40 rule works and why it might matter for prediction-market traders.

  June 20, 2026·

  • section-1256
  • taxes
  • prediction-markets
  • kalshi

• Are Kalshi Winnings Taxable?

  Yes — Kalshi winnings are taxable income in the U.S. Here is how event-contract gains and losses are generally reported, why the tax treatment is still unsettled, and what records to keep.

  June 19, 2026·

  • kalshi
  • taxes
  • prediction-markets
  • section-1256

Tools

Estimate your number

Free, instant calculators — no sign-up required.

• Kalshi Tax Calculator

  Estimate what your Kalshi losses could be worth at tax time — Section 1256 treatment and the $3,000 ordinary-income offset. Free, no sign-up.