Tax experts in the U.S. are struggling to reach a consensus on how users of prediction platforms like Polymarket and Kalshi should report taxes on their winnings. This was reported by Wired.

“We have a vacuum of guidance. This puts taxpayers at a disadvantage,” said Patrick Camuso, an accountant specializing in digital assets.

The IRS has not issued official guidelines regarding the taxation of prediction markets. However, there are several ways to report gains or losses.

Multiple Approaches — No Clear Answer

Some individuals apply rules governing financial derivatives. The platforms themselves claim to offer financial contracts regulated by the CFTC.

Others equate profits from prediction markets to gambling winnings or simply report them as ordinary income and hope for the best, Camuso stated.

The expert describes these platforms as “a mix of betting, derivatives, and investment contracts.” He assesses clients' tax obligations on a case-by-case basis:

“Our firm typically takes a more conservative stance for most clients due to the ambiguity of many tax rules.”

However, declaring income from prediction markets as gambling winnings is the most burdensome method. Instead of reporting a net amount, one must account for each bet, tracking winnings “per session.”

Trader Nate Meininger joked that the lack of guidance allows one to avoid reporting to the tax authorities. However, he is actively reviewing Kalshi's tax documents and consulting with an accountant.

If you’re wondering how to file your taxes for your prediction market income, you don’t. You don’t file it. The IRS isn’t telling us how to file it because they don’t want us to. Thank me later and follow me for more good tax advice

— Nate Meininger (@NathanMeininger) March 13, 2026

“I don’t do it myself. It’s too complicated,” he admitted.

Sources from CNBC have also noted another option — treating prediction market contracts as instruments under Section 1256 of the U.S. Tax Code.

In this case, profits or losses are taxed at a 60/40 formula regardless of the holding period: 60% is considered long-term capital gain (or loss), and 40% is short-term.

The Offshore Platform Dilemma

Americans using VPNs to access Polymarket and other crypto platforms face particularly complicated situations. These platforms do not provide tax documentation.

Legally, U.S. users are generally prohibited from engaging with unlicensed services. However, all citizens are required to report income, regardless of the source. Therefore, traders purchasing contracts on Polymarket must report their earnings independently.

Journalists suggest that the situation may worsen with the IRS undergoing a major reorganization. The tax agency is experiencing a significant overhaul, with some processes being led by operatives from Elon Musk's DOGE.

Recall that in early April, CFTC Chairman Michael Selig called on officials to establish clear rules for prediction markets. He warned that otherwise, many companies would move offshore, leaving investors facing an “illusion” similar to the scenario of FTX.