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For U.S. federal taxes, don’t assume prediction-market winnings are tax-free just because you didn’t receive a tax form. The IRS says taxable income generally must be reported even when no Form 1099-K arrives. But the IRS materials reviewed do not specifically classify gains and losses from prediction-market event contracts or say which forms apply to them. Keep detailed records and ask a qualified tax professional how the rules apply to your contracts and tax year.
This article covers U.S. federal guidance available as of October 7, 2026. State and non-U.S. tax treatment may differ, and platform reporting practices can change.
Does the IRS consider prediction-market winnings taxable?
The practical answer is: don’t treat the absence of a tax form as proof that you owe no tax. The IRS says, “All income, no matter the amount, is taxable unless the tax law says it isn’t – even if you don’t get a Form 1099-K.” It also says Form 1099-K should be considered alongside other tax records when determining and reporting taxable income.
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That is a general income-reporting principle, not a prediction-market-specific ruling. The IRS sources reviewed do not say whether event-contract gains and losses are gambling income, capital gains, derivative income, or something else. They also do not establish which federal forms or schedules apply to those contracts. Treat the classification as an open question for your particular activity, rather than assuming that one familiar tax category automatically governs every market.
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- Yearly Tax Organizer: includes 2 spiral bound tax organizer designed to help you collect, sort, and store important tax records throughout the year, keeping receipts, income records, bills, and other paperwork in one easy to manage place
- Large Size for Everyday Documents: cover measures about 13 x 9.65 inches, with inside pages about 9.65 x 6.5 inches; The spacious pocket design provides room for receipts, statements, records, and tax-related papers without taking up too much desk or shelf space
- 12 Monthly Pockets for Easy Sorting: the tax record organizer features 12 pockets, making it simple to separate documents by month or category; Useful for organizing medical expenses, charitable donations, prescriptions, invoices, income folders, and monthly bill receipts
- Spiral Bound for Convenient Access: the secure spiral binding lets pages turn smoothly, so you can quickly add, remove, or review documents whenever needed; A practical design that helps simplify filing and reduce last-minute stress during tax season
- Widely Applied: this annual tax organizer is suitable for managing annual taxes, tracking receipts and preparing for audits all year round, making your tax preparation more systematic and manageable, and it is very suitable for annual tax returns, document storage and filing, professional tax services and tax agencies
Does the gambling rule settle the tax treatment?
No. IRS Topic No. 419 says casual gambling winnings are fully taxable and must be reported, including winnings not shown on Form W-2G. It also says gambling losses may be deducted only if the taxpayer itemizes on Schedule A, only up to reported gambling income, and keeps records. Those are the IRS’s general gambling rules; they do not establish that prediction-market event contracts qualify as gambling for tax purposes.
The IRS’s January 2026 instructions for Form W-2G discuss sports wagering and other wagering transactions. The existence of those categories does not, by itself, prove that event contracts fit them. A 2026 tax-industry report also describes federal treatment as unresolved; it is secondary coverage, not an IRS determination.
What does a tax form—or no tax form—tell you?
A form can report a particular kind of payment or transaction without deciding how all of your prediction-market activity should be taxed. Conversely, not receiving a form does not automatically make income nontaxable. Match each form to what it reports, keep your own transaction records, and ask a tax professional how to report activity that is not clearly covered.
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- Comprehensive Tax Package Inclusions: The pack includes 1 all in one income tax organizer, 1 sheet of tax category pre printed label sticker, 1 common tax category list, 12 alphabet labels, giving you everything you need for tax preparation
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- Large capacity: This tax document organizer has 13 pockets, each holding about 40 sheets of paper, it can be flexibly expanded and shrunk as the number of files increases, holding a total of about 500 sheets of paper, ideal for organizing and protecting important documents, paperwork, bills, tax records, receipts, invoices and more
- Pre Printed Labels and Customizable labels: these pre printed label stickers have common tax categories, such as Medical Expenses, Employment Income, Rental Income, and more, we also included alphabet labels and customizable labels for your personal uses, please note that the customizable labels do not come with adhesive
- Broad uses: this expandable file folder organizer is proper for organizing various financial and tax related documents, with strippable labels and divider labels for sorting, making your tax preparation more systematic and managed, ideal for annual tax returns, document storage and filing, professional tax services, and tax agencies
Kalshi forms and its profit-and-loss statement
In a June 22, 2026 Help Center article, Kalshi says users who meet applicable IRS reporting thresholds may receive forms for certain types of activity. The examples below describe Kalshi’s stated documentation, not a universal rule for all platforms or a classification of event-contract gains.
| Document | Activity Kalshi says it may cover | What it does not establish |
|---|---|---|
| Form 1099-INT | Interest payments. | How event-contract trading gains or losses are classified. |
| Form 1099-MISC | Credits or rewards. | Whether all promotional credits or trading results receive the same tax treatment. |
| Form 1099-B | Broker transaction proceeds from crypto transfers. | The tax treatment of event contracts simply because they are held on the same platform. |
| Form 1099-DA | Digital-asset reporting from Zero Hash. | The tax classification of an event contract; digital-asset reporting concerns digital-asset transactions. |
| Profit-and-loss statement | A summary of trading activity, including profits, losses, fees, and rebates. | A tax return, IRS-approved calculation, or individualized tax advice. |
Kalshi says its P&L data is updated monthly, so a mid-month review may omit recent activity. Save dated copies and compare the figures with your full transaction history. The company states: “This information and the information included in the Profit and Loss statement are not tax advice, and Kalshi cannot give members advice on their taxes.”
Information-return thresholds are not tax exemptions
The IRS’s 2026-19 Internal Revenue Bulletin describes a $2,000 information-return threshold for specified payments made after December 31, 2025, indexed for inflation after calendar year 2026. That threshold concerns whether an information return is required for specified payments; it does not determine whether income is taxable and does not resolve how event-contract activity is classified. Check the rules for the particular form, payment, platform, and tax year rather than applying the figure to all market winnings.
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- Yearly Tax Organizer: includes 1 spiral bound tax organizer designed to help you collect, sort, and store important tax records throughout the year, keeping receipts, income records, bills, and other paperwork in one easy to manage place
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- Durable: our tax document organizer is made of paper, which is very durable and convenient for you to use frequently in your daily work
- Large Capacity: this tax document organizer has 12 pockets, which makes it convenient for you to sort and file receipts and records and store them in a centralized manner; With this document organizer, you can organize various documents such as medical expenses, prescription drugs, charitable donations, etc. throughout the year, and face tax season confidently and efficiently
- Widely Applied: this annual tax organizer is suitable for managing annual taxes, tracking receipts and preparing for audits all year round, making your tax preparation more systematic and manageable, and it is very suitable for annual tax returns, document storage and filing, professional tax services and tax agencies
The same bulletin reports that more than 4,000 payors filed 17.3 million Forms W-2G for tax year 2024 for gambling winnings in the range between old and new reporting thresholds; almost 80% related to slot-machine play. That is context about gambling reporting, not evidence about prediction-market participation or how prediction-market contracts should be taxed.
Withholding rules are category-specific
IRS Publication 505 for 2026 describes a 24% withholding rate for specified categories of gambling winnings, including certain other wagers with proceeds of at least 300 times the bet and winnings over $5,000. Those conditions do not mean 24% withholding automatically applies to prediction-market payouts. The IRS materials reviewed do not establish that event contracts fall within those categories.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What records should you keep?
Keep a separate, complete record for each tax year, even if the platform provides an annual summary. The IRS’s gambling guidance calls for an accurate diary or similar record and supporting evidence when claiming gambling losses. The list below adapts that general recordkeeping principle to online account activity; it is not an IRS-prescribed form for event contracts.
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- All-In-One Monthly Organizer: Keep all your important documents in one place with Sooez Accordion File Organizer. 13 pockets design works great for Monthly organizing and protecting all your important paperwork, bills, taxes, receipts, invoices and more. Perfect for letter size.
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- Transaction or order history: Save the contract or event name, position, quantity, timestamps, entry and exit prices, settlement outcome, and amounts paid or received.
- Platform statements: Download the annual P&L statement, any notes explaining its calculation, and dated copies of monthly versions. Retain the platform’s description of what its statement includes.
- Separate account activity: Preserve records of fees, rebates, promotional credits, rewards, deposits, withdrawals, and account balances so they are not mistaken for contract proceeds or trading results.
- Tax forms and explanations: Keep every form received, including any W-2G, 1099-MISC, 1099-INT, 1099-B, 1099-DA, or 1099-K, along with the platform’s explanation of the activity it covers.
- Digital-asset records: If crypto is involved, save relevant wallet and exchange statements, transfer details, and records of digital-asset sales.
- A reconciliation: Document how your transaction history ties to platform statements and tax forms. Note adjustments, discrepancies, and missing records, and keep the calculations you used to resolve them.
- Evidence for any claimed losses: Retain statements, receipts, or other supporting documents that substantiate amounts won and lost.
The IRS says broker reporting on Form 1099-DA applies to digital-asset sales after 2025. If your account involves digital assets, ask separately whether their sale or transfer creates reporting obligations. That rule does not itself determine the tax classification of an event contract.
Can you deduct prediction-market losses?
The answer depends on the tax characterization that applies to your contracts and circumstances; the IRS materials reviewed do not resolve that classification. Do not assume that losses can be netted against gains from other activity or deducted under a particular schedule just because a platform labels a result a “loss.”
If the gambling rules apply to a taxpayer’s activity, IRS Topic No. 419 says gambling losses are deductible only when the taxpayer itemizes on Schedule A, only up to the amount of reported gambling income, and with adequate records. That rule should not be treated as a definitive prediction-market rule without a supportable basis for applying it to the contracts in question.
What should you ask a tax professional?
Bring your transaction history, platform statements, tax forms, and any crypto records. Ask for advice tied to the actual contracts you traded and the relevant tax year, not a general answer based only on the platform name.
- For the contracts I traded, what tax characterization is supportable for this tax year, and what authority supports it?
- Which forms and schedules should report realized gains, losses, fees, rewards, interest, or contract sales under that characterization?
- How should I reconcile partial exits, positions held to settlement, reversals, and activity across multiple platforms?
- What loss rules apply to my facts, and can losses offset gains from other activity?
- Do deposits, withdrawals, or transfers involving crypto create separate digital-asset reporting obligations?
- Does my state treat these contracts differently from federal tax treatment? Could residence, travel, or non-U.S. accounts affect the result?
- What records should I retain to substantiate both the reported amounts and the method used to calculate them?
Ask the professional to explain any assumptions and how they apply to open positions, fees, and account activity at year-end. Kalshi itself says its tax documents and P&L statement are not tax advice.
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