How are prediction markets taxed? The IRS hasn’t provided guidance yet

• The Internal Revenue Service has yet to disclose how prediction market wins and losses should be taxed.
• Without guidance from the IRS, tax experts say it’s tricky to determine the tax treatment that may apply to prediction market contracts, such as which team will win the World Cup final on Sunday. 
• For now, tax experts see multiple ways income from prediction markets may be categorized, including under gambling income, capital gains and the Section 1256 contracts. 

As prediction markets grow in popularity, traders are facing a key question: The Internal Revenue Service hasn’t shared any details on how their winnings are to be taxed.

Source: https://www.cnbc.com/2026/07/18/how-are-prediction-markets-taxed-the-irs-hasnt-provided-guidance-yet.html