How gains from event contracts on platforms such as Kalshi and Polymarket are taxed. The IRS has issued no guidance, so the same trade can be characterized as capital gain, ordinary income, section 1256 gain, or gambling.
Characterization changes the rate, how losses are used, and which forms apply. Gambling treatment is the worst outcome in 2026 because of the 90 percent loss cap. No platform issues a complete trade-level 1099-B, so records are yours.
Yes. Winnings are taxable regardless of characterization, and the USDC received carries its own basis for later disposal.
Source: No IRS guidance as of September 2026; IRC 1256; IRC 165(d)
Last reviewed September 17, 2026. Tax rules change; confirm current law before acting.
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