The tax consequences of earning through prediction markets differ substantially across jurisdictions and hinge on variables such as your trading volume, whether this represents your main source of earnings, and your country's approach to USDC-denominated transactions. This resource outlines the principal regulations across major markets — you should always seek advice from a qualified tax adviser familiar with your local rules.
United States
- Most prediction market platforms restrict access for residents of the US (Polymarket applies geographic restrictions) — though direct blockchain activity remains technically available
- The IRS classifies crypto holdings as property; each USDC transaction may trigger a taxable event
- Earnings from prediction markets are generally treated as short-term capital gains (taxed at ordinary income rates if positions are held for less than 12 months)
- Kalshi (authorised by the CFTC) generates 1099 reporting forms; decentralised platforms do not — traders must report independently
- Those engaged in regular trading activity may potentially qualify for trader tax status (permitting mark-to-market accounting methods)
United Kingdom
- A gambling classification may apply: returns could be exempt from tax if the activity qualifies as gambling
- Investment classification would trigger capital gains tax: the £3,000 CGT allowance applies in 2026
- Income classification for active traders — National Insurance contributions may be due
- HMRC guidance on prediction markets remains non-specific and subject to interpretation
Germany
- §23 EStG provides relief: gains below €600 annually from private transactions escape taxation
- USDC held beyond one year may qualify for exemption under German cryptocurrency tax rules
- Regular trading activity typically results in income tax classification
- Glücksspielgewinne (gambling prize money) ordinarily avoids taxation — though application to prediction markets remains ambiguous
Australia
- The ATO views crypto holdings as property: capital gains tax applies upon realisation
- A 50% discount on capital gains applies where assets are retained for longer than 12 months
- Gambling prizes are typically not taxable unless the person qualifies as a professional gambler
Best Practices Globally
- Export your full transaction record from PolyGram to support your tax filing
- Employ dedicated crypto accounting tools (Koinly, CoinTracking) to determine your gain or loss position
- Maintain comprehensive documentation of every USDC movement, encompassing deposits and withdrawals
- Engage a tax professional with expertise in cryptocurrency matters within your country
FAQ
- Does PolyGram report my earnings to tax authorities?
- PolyGram presently does not furnish tax documentation to users. The responsibility for disclosing prediction market returns rests with you in accordance with your jurisdiction's requirements.
- Is USDC treated differently from volatile crypto for tax?
- Across most jurisdictions, USDC remains classified as a digital asset and faces identical taxation as other cryptocurrencies like BTC or ETH. Although its price stability makes gain computation more straightforward, the underlying tax framework remains unchanged.
- What records should I keep?
- Retain documentation for each transaction including the date, quantity, entry and exit prices, and final result. PolyGram offers downloadable transaction records — obtain these on a regular basis.