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1Clear out junk files and repair common Windows errors2Fix the driver behind crashes, sound loss and screen glitches3Repair Windows errors before they cause bigger problemsPrediction-market winnings may be taxable, but the IRS sources reviewed do not specifically classify event-contract profits or prescribe a reporting method for them. The IRS says gambling winnings are fully taxable and must be reported, including when no Form W-2G is issued. Whether that gambling guidance applies to a particular prediction-market contract is not settled by those sources. For U.S. federal taxes, keep complete records and do not treat a missing tax form as proof that income can be omitted.
What the IRS says—and what it does not settle
IRS Topic No. 419, “Gambling income and losses,” says gambling winnings are fully taxable and must be reported. It directs casual gamblers to report winnings on Form 1040 or Form 1040-SR using Schedule 1, including winnings not shown on Form W-2G.
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That is general gambling guidance, not a specific IRS ruling on prediction-market event contracts. The IRS sources discussed here do not establish that every contract is gambling, a capital asset, or a Section 1256 contract. Do not assume one tax treatment applies to every platform, contract, or user.
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- Gambling guidance: applies to gambling winnings as described by the IRS; whether a particular event contract falls in that category is unresolved in the sources reviewed.
- Digital-asset rules: may apply to a transaction that actually involves a digital asset, but not automatically to every prediction-market position.
- Platform statements: can help document activity, but do not determine its tax character.
Do I have to report winnings if I didn’t get a 1099?
A missing information form does not, by itself, remove a duty to report taxable income. The IRS says gambling winnings must be reported even when they are not reported on Form W-2G, and its general taxable-income guidance likewise says income can remain reportable without an information form.
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Form W-2G is issued for certain gambling winnings or winnings subject to federal withholding. Its filing and withholding conditions depend on the gambling category and circumstances; they are payer rules, not a universal tax-free threshold for prediction-market activity. Do not apply a threshold for one gambling category to event contracts as though the IRS had specifically addressed them.
For the applicable return, check that filing year’s Form 1040 and Schedule 1 instructions for the current line and reporting method. The 2025 edition of IRS Publication 17 refers to Schedule 1, line 8b for gambling winnings; that is a tax-year-specific reference, not a line number to carry forward automatically.
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What records should I keep?
Keep a contemporaneous log and the original platform records or exports that support it. The IRS’s gambling guidance calls for an accurate diary or similar record, supported by statements, receipts, tickets, or other documentation. Its digital-asset guidance calls for records of purchases, receipts, sales, exchanges, and other dispositions, including fair market value in U.S. dollars for digital assets received as income.
- Transaction date and time, where available, plus the contract or asset and its terms.
- Amounts paid, received, and settled, with the associated U.S.-dollar values.
- Purchases, sales, settlements, redemptions, transfers, and any open positions shown on the relevant statement.
- Fees, rebates, and other credits, recorded separately when the platform reports them separately.
- Basis or acquisition details where relevant, and the source used to determine any required U.S.-dollar fair market value.
- Monthly or annual platform statements, downloadable transaction histories, receipts, and relevant wallet or broker records.
Preserve the underlying records even if a platform provides a summary. That makes it possible to reconcile the summary against the actual activity and to give a tax professional the details needed to assess classification.
How to use platform tax forms and profit-and-loss statements
Platform documents can cover different kinds of activity. A tax form or P&L may be useful evidence, but it is not an IRS determination that event-contract profits have a particular tax character.
| Document or guidance | What it may cover | What it does not establish |
|---|---|---|
| Form W-2G | Certain gambling winnings or winnings subject to federal withholding, under category-specific conditions described by the IRS. | That every prediction-market user will receive one, or that unreported-on-form winnings are tax-free. |
| Form 1099-DA | Digital-asset broker reporting of gross proceeds and, in some cases, basis, as described by IRS digital-asset guidance. | That every event-contract position is a digital-asset transaction. |
| Platform P&L or account statement | Activity and calculation details defined by that platform; check the statement for what it includes. | The correct tax classification or reporting method for the user’s activity. |
Kalshi documentation example
In a help article dated June 22, 2026, Kalshi says members who meet applicable IRS reporting thresholds may receive forms for interest (1099-INT), credits or rewards (1099-MISC), broker transaction proceeds from crypto transfers (1099-B), and digital-asset reporting through Zero Hash (1099-DA). The same article says its account P&L includes fees and rebates, uses FIFO, and is updated monthly. It also says the P&L and tax information are not tax advice. Those details describe Kalshi’s stated documentation practices; they should not be assumed to describe another platform or every user’s account.
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Can you deduct prediction-market losses?
The IRS says casual gamblers may deduct gambling losses only if they itemize, and only up to the amount of gambling income reported. It also requires records supporting both winnings and losses. This is general gambling guidance; it does not resolve whether losses from a particular prediction-market contract qualify as gambling losses, or what treatment applies if the activity is classified another way.
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Do not net losses against winnings or claim a deduction solely because a platform displays a negative P&L. The applicable treatment depends on how the activity is classified and on the taxpayer’s facts. A tax professional familiar with prediction-market event contracts can evaluate that question using the transaction records.
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If your activity involved cryptocurrency
Apply digital-asset recordkeeping guidance to the transactions that actually involved digital assets—for example, relevant purchases, receipts, sales, exchanges, or other dispositions. The IRS says digital-asset transactions must be reported whether or not they produce a taxable gain or loss, and taxable transactions can remain reportable even when the taxpayer receives no Form 1099-DA.
This does not mean every event contract is itself a digital asset or that every platform trade belongs on a digital-asset form. Keep separate records for the contract activity and any related crypto transfers or dispositions so the transactions are not conflated.
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