Sports Prediction Markets taxed as gambling?

As of Mon, 31 Aug 2026 19:53:15 UTC, Polymarket traders price Yes (22.5%). The market has $45K in volume and closes on Fri, 16 Apr 2027.

Updated:

Current odds

OutcomeChanceYes priceNo price
Yes22.5%22.5¢77.5¢

Market details

Resolution rules

This market will resolve to "Yes" if, by April 15, 2027, 11:59 PM ET, the IRS or U.S. Department of the Treasury publishes formal guidance classifying losses from CFTC-regulated sports event contracts as subject to the 90% loss cap under Section 165(d) of the Internal Revenue Code, as amended by the One Big Beautiful Bill Act (Public Law 119-21). Otherwise, this market will resolve to "No". For purposes of this market, sports event contracts are contracts whose payoff is determined by the outcome, score, or statistical result of an athletic competition listed on a CFTC-designated contract market or swap execution facility. Qualifying guidance must be published in the Internal Revenue Bulletin or the Federal Register as a Revenue Ruling, Revenue Procedure, IRS Notice, IRS Announcement, final or temporary Treasury Regulation, or proposed Treasury Regulation that remains published without withdrawal for at least 30 calendar days after its Federal Register publication date. Guidance qualifies if it expressly applies Section 165(d) to such contracts or classifies them as wagering transactions for federal income tax purposes. Guidance classifying sports event contracts as wagering solely for purposes of Section 4401, Section 6041, Section 3402(q), or other Code sections that do not bear on the deductibility of losses does not qualify. Non-qualifying actions include Private Letter Rulings, Chief Counsel Advice, Tax Court decisions, IRS official statements, Congressional testimony…

Sources

Related markets

DOXA is a liquidity aggregator for prediction markets that compares odds and depth across Polymarket, Kalshi and others and routes each trade for best execution with an AI assistant.