How prediction market earnings are taxed differs substantially across jurisdictions and hinges on elements such as how frequently you trade, whether it constitutes your main source of income, and your country's stance on USDC-denominated transactions. This overview covers the principal considerations — always engage a qualified tax adviser in your region before filing.
United States
- Most prediction market platforms restrict access from US-based users (Polymarket implements geographic blocking) — though blockchain-based activity remains technically available
- The IRS classifies crypto holdings as property; each USDC transaction may trigger a taxable event
- Gains from prediction markets are probably subject to short-term capital gains rates (taxed as ordinary income if positions closed within 12 months)
- Kalshi (operating under CFTC oversight) generates 1099 forms; decentralised platforms do not — individuals must report independently
- Those engaged in frequent trading might qualify for trader status (permitting mark-to-market treatment)
United Kingdom
- Possible gambling exemption: earnings could escape taxation if the activity qualifies as gambling
- Capital gains treatment if deemed investment activity: £3,000 CGT allowance available for 2026
- Income classification for professional traders — National Insurance contributions may be due
- HMRC has yet to issue clear rulings on how prediction markets should be categorised
Germany
- §23 EStG: profits below €600 annually from private transactions are exempt
- Holding USDC for longer than 12 months: gains may qualify for exemption under German cryptocurrency tax rules
- Regular trading activity likely results in income tax classification
- Glücksspielgewinne (gaming proceeds) typically enjoy tax exemption — though the categorisation remains ambiguous
Australia
- The ATO views crypto as property: capital gains obligations arise upon sale
- Assets retained beyond 12 months qualify for a 50% CGT reduction
- Gaming proceeds are ordinarily exempt unless the participant is a professional gambler
Best Practices Globally
- Export your full transaction record from PolyGram for use in tax calculations
- Leverage crypto accounting tools (Koinly, CoinTracking) to determine your gains and losses
- Maintain documentation for every USDC movement, including deposits and withdrawals
- Retain a crypto tax specialist familiar with your local rules
FAQ
- Does PolyGram report my earnings to tax authorities?
- PolyGram presently does not furnish tax documentation to users. The responsibility for declaring prediction market income rests with you in your respective jurisdiction.
- Is USDC treated differently from volatile crypto for tax?
- Across most jurisdictions, USDC remains a cryptocurrency subject to identical taxation as Bitcoin or Ethereum. Its price stability makes gain computation easier but does not alter the underlying tax framework.
- What records should I keep?
- Retain all transaction receipts showing date, quantity, entry and exit prices, and final result. PolyGram allows you to download your transaction data — ensure you save this periodically.