Do You Pay Taxes on Polymarket and Kalshi Winnings?
Short answer for US users: yes, winnings are taxable income, and that stays true even if the platform never sends you a tax form. The "no form arrived, so it doesn't count" belief is the single most expensive tax myth in this hobby. Here's the beginner-level picture — what's settled, what varies, and what to do this week either way.
The one settled principle
US tax law taxes income regardless of paperwork. Forms like the 1099 exist to help the tax agency cross-check; their absence shifts the tracking burden onto you rather than erasing the income. If you netted a profit trading event contracts this year, that profit belongs on your return whether or not any envelope shows up in January.
Why the two platforms feel different at tax time
Kalshi operates as a US-regulated exchange with your verified identity on file, so it issues tax forms in more situations and the paper trail is straightforward. Polymarket runs on crypto rails, which adds a wrinkle: your money there lives as the USDC stablecoin, and moving between crypto and dollars can itself be a taxable event in the US, separate from your trading wins and losses. Crypto rails also mean less paperwork arrives on its own — which, again, means more tracking falls on you. (New to the platform differences? See Polymarket vs Kalshi.)
What's genuinely unsettled
How event-contract profits are classified — and therefore exactly which rates and loss-deduction rules apply — has been an evolving area, and people in different situations can get different answers. That's not a reason to panic; it's the specific question to bring to a professional along with your trade records. What is not unsettled: the income itself is reportable.
The five-minute habit that prevents the April disaster
Keep a running spreadsheet from your very first trade: date, market, money in, money out, profit or loss. Export or screenshot your platform trade history monthly. Reconstructing a year of trades from memory the week taxes are due is how honest people end up filing wrong numbers. This habit costs five minutes a month and belongs on the same list as the first-bet checklist.
Three myths, three sentences
"No 1099 means no taxes" — false, see above. "It's gambling, so it's tax-free" — false in the US, where gambling winnings are taxable too (some other countries differ). "I lost money overall, so I can ignore it all" — risky, because documented losses are what let you offset wins, and undocumented ones help nobody.
Learn the whole game before real money (and real taxes)
Every real-money consequence on this page starts with a first deposit. Polywise teaches the full flow — prices, edge, fees, resolution — free, with zero deposits and zero tax paperwork, so you can decide with open eyes whether real trading is for you.
Learn risk-free on Polywise →Frequently asked questions
Do I owe taxes on prediction market winnings if I never got a tax form?
In the US, yes. Taxable income is taxable whether or not a form arrives in the mail. No 1099 means the reporting burden shifts to you, not that the income became invisible. Keep your own records and report your net winnings.
What records should I keep for prediction market taxes?
For every trade: date, market name, amount in, amount out, and the profit or loss. A simple spreadsheet works. Export or screenshot your trade history regularly — platforms change, and reconstructing a year of trades in April is miserable.
Can I deduct my prediction market losses?
Often losses can offset winnings, but how depends on how the activity is classified for your situation, and classification rules for event contracts have been evolving. This is exactly the question worth one hour of a tax professional's time.
Are Kalshi and Polymarket taxed the same way?
Not necessarily. Kalshi is a US-regulated exchange and issues tax forms in more situations; Polymarket runs on crypto rails, which can add a second layer, since converting crypto like USDC can itself be a taxable event. Same principle though: you owe tax on gains from either.
Is any of this different outside the United States?
Yes, completely. Some countries tax betting-style winnings, others don't, and some treat them as capital gains. The only universal rules: keep records, and check your own country's treatment before assuming anything.