Do you pay taxes on Kalshi winnings?

Gains are generally taxable, but the IRS has not said how event contracts should be treated. Kalshi says it may send Forms 1099-INT, 1099-MISC, 1099-B or 1099-DA, and that it cannot give tax advice. Ask a tax professional.

Are prediction market winnings taxed as gambling?

Unsettled. Practitioners have reported event contracts as section 1256 contracts, capital gains, wagering and ordinary income, and the IRS has issued no guidance choosing among them.

Guide

Prediction markets and taxes

The IRS hasn’t said. Here is what it does say about gambling, the competing theories, and what each platform reports.

Reviewed Oct. 22, 2026 · Live figures update with our records · Sources are footnoted

The short answer

The IRS has not addressed how prediction-market contracts are taxed.^1,2 Practitioners report them in several different ways, so this is a question for a tax professional. Nothing here is tax advice.

What the IRS says about gambling

Gambling income includes sports-betting winnings and is fully taxable; payers issue Form W-2G for some winnings.³ Losses can be deducted only by people who itemize, and only up to their winnings.³ For tax years starting in 2026, only 90% of wagering losses can be deducted against wagering gains.⁴ Whether any of that applies to event contracts is the open question.

The competing treatments

Some argue event contracts are section 1256 contracts, which are taxed 60% long-term and 40% short-term regardless of holding period, though that requires trading on a qualified exchange.^1,5 Others note that treating them as swaps could take them outside section 1256, and one tax-preparer group calls the 1256 position favourable but aggressive.^1,2 Practitioners have filed under section 1256, capital-gain, wagering and ordinary-income treatment.⁶

What platforms report

Kalshi: Kalshi says users who meet IRS reporting thresholds get Form 1099-INT (interest), 1099-MISC (credits and rewards), 1099-B (proceeds from crypto transfers) and 1099-DA (digital asset reporting from ZeroHash). The forms appear under Tax Info in the Account tab, and some are emailed through Zenwork. Kalshi gives no dollar thresholds or issue dates. Trading profit-and-loss statements are in the documents tab (help article updated June 22, 2026).⁷
Robinhood: NATP, a tax-preparer association, reports that Robinhood has said it won't issue Forms 1099 for event contract trades. Robinhood instead provides an Event Contracts Annual Statement labeled 'not a substitute tax reporting form.' Robinhood's derivatives client agreement says it will provide 'certain tax documents.'²
Crypto.com: Crypto.com says it may be required to issue Form 1099-B to US persons who traded contracts during the tax year, describing them as 'Regulated Futures/Options' contracts. It also issues 1099-MISC for rewards and 1099-DA for digital assets. The page doesn't specifically mention prediction or sports event contracts.⁸
PrizePicks: PrizePicks says it issues Form 1099-B for Team and Culture Picks, reporting all gains or losses from buying and selling event contracts, with no threshold stated. Forms are generally uploaded in February for the prior year, in the app's Tax Information section. Other PrizePicks pick types get a 1099-MISC at $600+ in net winnings.⁹
Robinhood has reportedly said it won’t issue 1099s for event-contract trades, and its annual statement is not a substitute tax form.²

Platforms we haven’t listed don’t publish tax-form information we could confirm.

Questions

Do you pay taxes on Kalshi winnings?: Gains are generally taxable, but the IRS has not said how event contracts should be treated. Kalshi says it may send Forms 1099-INT, 1099-MISC, 1099-B or 1099-DA, and that it cannot give tax advice. Ask a tax professional.
Are prediction market winnings taxed as gambling?: Unsettled. Practitioners have reported event contracts as section 1256 contracts, capital gains, wagering and ordinary income, and the IRS has issued no guidance choosing among them.