Across jurisdictions, the tax implications of prediction market earnings differ substantially based on trading volume, whether trading constitutes your main occupation, and how your region treats stablecoin-denominated transactions. This overview covers the principal requirements — always engage a qualified accountant in your region for personalised guidance.
United States
- Many prediction market platforms restrict access for US-based participants (Polymarket applies geographic restrictions) — though blockchain-based activity remains technically available
- The IRS classifies cryptocurrency holdings as tangible property; each USDC transaction may trigger a taxable event
- Earnings from prediction markets are ordinarily taxed as short-term capital gains (at standard income tax rates when positions close within 12 months)
- Kalshi, being CFTC-regulated, generates 1099 documentation; decentralised platforms do not — traders must self-declare
- Those engaged in frequent trading may qualify for trader status under tax law (enabling mark-to-market election)
United Kingdom
- A gambling carve-out may apply: earnings could be exempt if classified as gambling activity
- If treated as investment income: a £3,000 CGT allowance exists for the 2026 tax year
- Trading conducted on a professional basis falls under income classification — National Insurance contributions may be due
- HMRC guidance on prediction market taxation remains non-specific
Germany
- Under §23 EStG: private transaction gains below €600 annually incur no tax liability
- USDC positions retained beyond 12 months: gains may qualify for exemption under German cryptocurrency tax law
- Sustained trading activity typically results in ordinary income tax classification
- Glücksspielgewinne (gambling payouts) ordinarily escape taxation — though prediction market classification under this category remains ambiguous
Australia
- The ATO categorises cryptocurrency as property: CGT obligations arise upon realisation
- Assets retained for 12 months or longer qualify for a 50% CGT reduction
- Gambling-related winnings are typically non-taxable unless the recipient qualifies as a professional gambler
Best Practices Globally
- Export your transaction log from PolyGram for use in tax filings
- Employ specialised software (Koinly, CoinTracking) to compute realised gains and losses
- Maintain comprehensive documentation of every USDC transaction, encompassing entry and exit points
- Retain a crypto-experienced tax adviser familiar with your local rules
FAQ
- Does PolyGram report my earnings to tax authorities?
- PolyGram does not presently furnish tax documentation to participants. You bear sole responsibility for declaring prediction market income within your jurisdiction.
- Is USDC treated differently from volatile crypto for tax?
- Most jurisdictions apply identical tax rules to USDC as to other cryptocurrencies like BTC or ETH. Though its price stability eases gain computation, the underlying tax framework remains unchanged.
- What records should I keep?
- Retain all transaction receipts showing date, quantity, entry and exit prices, and final result. PolyGram supplies downloadable transaction records — save these on a regular basis.