Your return from a prediction-market contract depends on more than whether you are right: the price you pay, the price you can sell for, venue and intermediary charges, payment costs, and taxes can all change what you keep. Fees vary by venue, market, price, and order type, while tax treatment depends on the contract and your circumstances. Compare executable prices and all applicable costs—not a headline fee rate—before trading.
Which costs affect a prediction-market return?
A contract’s quoted price is not necessarily the price at which you can trade immediately. Your all-in result can reflect the entry price, payout or exit proceeds, the venue’s trading fee, broker or exchange charges, payment costs, and the bid-ask spread or other execution slippage. Taxes are a separate consideration. The CFTC’s explanation of prediction markets notes that, in most cases, order books show real-time customer bids and asks, and that taxes and fees may affect a trader’s return.
A useful planning identity is:
Net result before tax = payout or exit proceeds − entry cost − trading fees − broker or exchange charges − payment charges − spread or slippage cost.
This is a framework, not a tax calculation. If you use the actual executed entry and exit prices, those fills already incorporate the spread and slippage you experienced; do not subtract a separate spread estimate again.
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How much are prediction-market trading fees?
There is no single fee that applies to every prediction-market trade. A venue may calculate fees using contract price, quantity, market category, and whether your order immediately matches another order or rests on the book. A broker may add its own commission and pass through exchange fees. The schedules below are examples of published U.S. pricing reviewed in 2026, not a ranking or a guarantee that a fee will apply to every contract.
| Venue or access route | Published trading charge | Important qualifications |
|---|---|---|
| Kalshi fee schedule, effective July 7, 2026 | For a general immediately matched trade, the schedule gives round up(M × 0.07 × C × P × (1-P)). Its example charges $1.75 for 100 contracts priced at $0.50 each. |
M is the applicable contract multiplier; contract-specific multipliers and exceptions apply. The schedule generally does not charge under its trading-fee section for non-immediately matched resting orders, but specified maker-fee provisions exist. It lists no settlement or membership fee, free ACH deposits and withdrawals, and card deposit charges of up to 2%; alternative payment rails or third parties may charge separately. Check the schedule and payment terms for the specific trade. |
| Polymarket help article, dated July 10, 2026 | The article gives C × feeRate × p × (1-p). Makers pay zero under the stated schedule; charged-category taker rate parameters range from 0.04 to 0.07. |
Those rate parameters are formula inputs, not flat percentages of the trade value. Rates vary by category; the article says geopolitical and world-events markets are fee-free. Fees are charged in USDC and rounded to five decimal places. The stated schedule can change. |
| Interactive Brokers U.S. event-contract pricing | For Kalshi contracts: $0.01 commission plus a $0.01 exchange fee per contract. For CME event contracts: $0.01 commission plus a $0.01 exchange fee per contract. For ForecastEx forecast contracts: $0.00 commission plus a $0.01 exchange fee per contract. | These are the U.S. schedule figures listed by Interactive Brokers; rates may change, and introduced or managed accounts may pay more. Brokerage access can therefore have charges in addition to a venue’s own pricing. |
The same nominal number can mean different things across schedules. For example, Polymarket’s 0.04–0.07 values are inputs to a price-sensitive formula, while Interactive Brokers lists per-contract dollar amounts. To estimate a trade, use the applicable formula, multiplier, category, order treatment, and contract count rather than comparing the displayed rates in isolation.
What is the spread, and why does it affect returns?
The spread is the gap between the best available bid—the price a buyer is currently offering—and ask—the price a seller is currently asking. A buyer who crosses the spread may pay the ask to enter and receive only the bid if they sell immediately. The difference is an execution cost even if the venue labels the trade fee-free.
Spreads and available order-book depth change by market and moment. The sources cited here do not establish a typical spread across prediction markets, so there is no defensible universal spread figure to plug into a return estimate. Check the live bid, ask, and available quantity for the contract and trade size you actually intend to use. A displayed midpoint or an implied probability is not necessarily an executable price.
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The CFTC says a contract holder may trade before settlement at the current market price. That means an early exit depends on the price available at that time, not simply on the eventual settlement payout. A thin order book or changing market can make the achievable exit price worse than a screen price or earlier quote suggests.
How do fees and spreads change a trade’s result?
Consider the CFTC’s educational example: a trader buys a “yes” contract for $0.70 that pays $1 if the event occurs. If it settles in the trader’s favor, the gross gain is $0.30 per contract before fees and taxes. That is an illustration of the payout arithmetic, not a forecast that the event has a particular probability or that the trade will earn that return.
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To estimate your own result, start with the quantity and actual entry price, then estimate the payout or the executable exit price. Subtract the venue fee and any broker, exchange, and payment charges. If you model entry or exit using a midpoint rather than actual fills, allow for the spread and slippage—but do not add that cost again when your calculation already uses the executed prices. Assess tax separately rather than treating the pre-tax result as the amount you will keep.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How are prediction-market winnings taxed?
Do not assume that all event-contract gains receive the same U.S. federal tax treatment. IRS Publication 550 (2025) describes Section 1256 contracts through specified categories, including regulated futures contracts and nonequity options, and explains mark-to-market treatment for qualifying contracts held at year-end. It does not specifically establish that prediction-market event contracts as a class qualify. CFTC-regulated venue status alone does not settle that tax classification.
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Accordingly, the sources cited here do not support a blanket claim that prediction-market gains are all capital gains, ordinary income, gambling winnings, or Section 1256 gains. The answer can depend on the particular contract, the taxpayer’s facts, and applicable jurisdiction. For federal and state reporting, consult a tax professional familiar with derivatives and event contracts rather than relying on a general label for the platform.
Keep records that let you reconstruct each position
Preserve trade confirmations, contract identifiers and terms, trade dates, quantities, entry and exit or settlement prices, fees, deposits and withdrawals, and any positions still open at year-end. These records make it easier to calculate results and discuss reporting with a tax professional; this is practical recordkeeping guidance, not a claim that Publication 550 specifically mandates this list.
How to compare the all-in cost before placing a trade
Use the current market and account terms rather than relying on a venue’s headline fee alone. A practical comparison should account for:
- Order treatment: whether the order takes liquidity and matches immediately or rests on the book, and whether any maker fee or rebate applies.
- Contract and category: the market-specific multiplier or fee rate, the contract price, and any category exception.
- Execution: the live bid and ask, order-book depth at your intended size, and the price at which you could exit before settlement.
- Access charges: broker commission and exchange fees if using an intermediary, plus deposit, withdrawal, card, or other payment-rail costs.
- Records: what confirmations and account statements the venue or broker provides for tracking trades and open positions.
Fee schedules are subject to change, and the cited sources do not establish one universally cheapest venue. Verify the current fee schedule and market-specific terms before trading; then compare the likely executable prices and all charges for the actual route you will use.
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