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Tax treatment of prediction market winnings is still unresolved, with 2026 rules capping gambling loss deductions at 90 percent, Shelton Financial Management reports
- Tax treatment of prediction market winnings is still unresolved, with 2026 rules capping gambling loss deductions at 90 percent, Shelton Financial Management reports — Shelton Financial Management says the IRS has not settled whether election prediction market profits are taxed as gambling income or as Section 1256 contract gains, while Kalshi runs as a CFTC-regulated exchange and Polymarket operates under a different structure. It notes federal rules beginning in 2026 limit gambling loss deductions to 90 percent of losses, capped at total winnings, as congressional race trading topped 220 million dollars this cycle. (Shelton Financial Management)
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