How prediction market earnings are taxed differs substantially across jurisdictions and hinges on elements such as your trading volume, whether this constitutes your primary profession, and the way your country treats stablecoin-denominated transactions. This overview covers the principal considerations — always seek advice from a qualified tax adviser in your region before making decisions.
United States
- Most prediction market platforms restrict access for US-based participants (Polymarket implements geographic restrictions) — though direct blockchain engagement remains technically available
- The IRS categorises crypto holdings as property; each USDC transaction may trigger a taxable event
- Earnings from prediction markets are ordinarily classified as short-term capital gains (taxed at standard income rates if positions remain open for less than 12 months)
- Kalshi (overseen by the CFTC) generates 1099 tax documents; decentralised platforms do not — you must report independently
- Active traders may qualify for trader status under tax law (allowing mark-to-market election)
United Kingdom
- Possible gambling exemption: returns may be exempt from tax if the activity qualifies as gambling
- Investment classification triggers capital gains tax: £3,000 allowance applies annually in 2026
- Income classification for professional traders — Class 2 and Class 4 National Insurance contributions may be due
- HMRC has not released comprehensive rules on how prediction markets should be categorised
Germany
- §23 EStG: proceeds from private transactions under €600 annually are exempt
- Retaining USDC for more than 12 months: returns may qualify for exemption under German crypto tax rules
- High-frequency trading typically results in ordinary income classification
- Glücksspielgewinne (gaming proceeds) are ordinarily exempt — though the legal status remains ambiguous
Australia
- The ATO views crypto as property: capital gains tax applies upon realisation
- A 50% reduction in capital gains tax applies when holdings exceed 12 months
- Gaming returns are usually not taxable provided you are not classified as a professional gaming operator
Best Practices Globally
- Export your full transaction record from PolyGram for use in tax filing
- Leverage crypto accounting platforms (Koinly, CoinTracking) to determine your gains and losses
- Maintain documentation of every USDC movement, including deposits and withdrawals
- Engage a tax professional with crypto expertise in your country
FAQ
- Does PolyGram report my earnings to tax authorities?
- PolyGram does not presently furnish tax documentation to members. You bear the responsibility for declaring your prediction market returns according to the rules of your jurisdiction.
- Is USDC treated differently from volatile crypto for tax?
- Across most jurisdictions, USDC remains a digital asset subject to identical tax rules as Bitcoin or Ethereum. Its price stability makes calculating gains more straightforward but does not alter the underlying tax classification.
- What records should I keep?
- Retain all transaction receipts containing the date, quantity, entry and exit prices, and final outcome. PolyGram makes trade records available for export — ensure you download these on a regular basis.