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It's Tax Day, and no one knows how to file for prediction market winnings
As of Tax Day 2026, the IRS has issued no formal guidance on how to classify and report prediction market winnings, leaving traders and tax professionals in a grey area where gains could plausibly be
As of Tax Day 2026, the IRS has issued no formal guidance on how to classify and report prediction market winnings, leaving traders and tax professionals in a grey area where gains could plausibly be treated as ordinary income, capital gains, or gambling income — each with significantly different tax implications. Prediction markets are a new legal frontier in the U.S., and even tax professionals are still catching up. The Ars Technica article likely examines this filing confusion amid the booming popularity of platforms like Kalshi and Polymarket, highlighting the lack of clear IRS rules and the practical challenges traders face in choosing a defensible reporting approach by the April 15 deadline.
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Source: Ars Technica | 2026-04-15