Prediction market tax guide · 2026
Polymarket Taxes: No 1099, Still Reportable
Quick answer: Polymarket typically issues no US tax form, but profits from resolved markets are still taxable income. Because settlement happens in crypto, you may have two layers to report — the contract result and any gain or loss on the digital asset itself — and your own export is the only record you will have.
“I never got a form” is not a filing position
Information returns exist to help the IRS match income, not to define it. A platform that files nothing simply shifts the entire burden of proof onto you. The practical consequence is that your own trade export, wallet history and USD valuations have to be good enough to stand alone if the return is ever questioned.
Trading income or gambling winnings?
Kalshi trades on a CFTC-regulated designated contract market, which pushes many preparers toward trading treatment. Polymarket sits further from that framework, so the gambling analysis is harder to dismiss. The distinction decides whether your losses net against wins automatically or only through itemized deductions capped at winnings.
Do not choose the treatment that produces the smaller bill. Choose the one your tax professional can support, and keep records detailed enough to file either way.
What reporting usually applies, scenario by scenario
| Scenario | Form you may receive | What you generally report |
|---|---|---|
| Profitable year on Polymarket | Usually none | Self-reported result under the treatment you and your preparer select |
| Losing year | None | Report per the applicable treatment; keep the export even if nothing is owed |
| Converting stablecoin back to USD | Exchange 1099-DA or 1099-B, depending on where you cash out | Separate gain or loss on the digital asset disposition |
| Rewards, airdrops or referral credits | Usually none | Other income at USD value on the date received |
| Also traded Kalshi | Brokerage-style year-end document | Reported from that document; keep the two ledgers separate |
| Also bet a regulated sportsbook | W-2G at $600+ on 300:1 odds | Gambling rules apply to that activity, including the 2026 loss limitation |
Platform practices and digital-asset reporting rules change quickly. Treat this as an orientation table, then confirm your facts with a tax professional.
The two layers of a crypto-settled market
A sportsbook bet has one taxable layer: you staked dollars and received dollars. A crypto-settled prediction market can have two.
Layer 1 — the contract result
What you paid for a position versus what it resolved or sold for, in USD terms, less fees. This is the number most people think of as their profit.
Layer 2 — the digital asset
Movement in the value of the crypto you held between funding, settlement and cash-out. Stablecoins usually make this small, but small is not the same as nothing, and it must still be computed.
How to report a year of Polymarket activity
- 1Export your full trade and resolution history for the calendar year, plus the wallet transaction log behind it.
- 2Match each position: market, side, entry cost, resolution or exit value, fees, and date.
- 3Convert every entry, resolution and transfer to USD using the value at that moment, and save the source you used.
- 4Total gross winnings, gross losses, net result and fees separately, so either treatment can be filed from the same file.
- 5Add rewards, airdrops and referral credits as their own line items at USD value on receipt.
- 6Reconcile the platform totals against your wallet and bank records, and document any gap.
- 7Bring both the trading view and the gambling view of the numbers to your tax professional.
What belongs in your tax file
Free prediction-market ledger template (PDF)
A four-page print-and-fill reporting sheet built for Polymarket, Kalshi and Robinhood prediction markets: position log with entry date, settlement date, stake, proceeds, fees and result, a filled example, and a year-end summary that produces the figures your preparer needs under either treatment.
Interactive year-end checklist
Work through these steps in order between December and the filing deadline. Tick each one off as you go — your progress stays on this device.
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Your progress is saved on this device.
Frequently asked questions
Does Polymarket send a 1099?
Generally no. Polymarket is not a US brokerage or casino issuing W-2Gs, and crypto-settled offshore markets typically do not file US information returns for traders. That does not change the obligation: profits are taxable income whether or not a form arrives, and your own trade and wallet export becomes the primary record.
Are Polymarket profits taxed as gambling or as trading?
The treatment is fact-specific and still developing. Some preparers treat event-contract results as trading income, others as gambling winnings. The difference is significant: gambling losses are deductible only when you itemize and only up to winnings, while trading results net before they reach your return. Decide with a tax professional and document the reasoning.
Do I owe tax on crypto conversions as well as contract profits?
Possibly. Funding an account, receiving stablecoin on resolution, and converting back to dollars can each involve a disposition of a digital asset with its own gain or loss, separate from the outcome of the contract. Record the USD value at every step so both layers can be computed.
Can I deduct Polymarket losses?
Only under the treatment that applies to your activity, and only with records. Under gambling treatment losses require itemizing and are capped at winnings, with the 2026 limitation reducing the deductible amount further. Under trading treatment different netting rules apply. Either way you need a position-by-position log.
What if I traded Polymarket, Kalshi and a sportsbook in the same year?
Keep them in separate ledgers, because the paperwork differs. Kalshi posts a brokerage-style year-end document, sportsbooks issue W-2Gs at $600 on 300:1 odds, and Polymarket typically issues nothing. All three still land on the same return.
When no form arrives, your ledger is the record
NetBetTracker logs each position with its date, stake, settlement and fees, so you can produce a gross-winnings figure, a netted figure and a session log from the same data — the difference between a defensible return and a reconstruction from memory.
Start a 7-day free trialThis guide is educational and is not tax or legal advice. Tax treatment of prediction market contracts and digital assets is fact-specific and evolving; consult a qualified tax professional about your situation.