Prediction Market Tax Guide 2026: Country-by-Country Overview

The taxation of earnings from prediction markets differs substantially across jurisdictions and hinges on several variables: how frequently you trade, whether this constitutes your primary source of income, and the way your country's tax authority treats USDC-denominated transactions. This overview covers the essential regulations across major markets — you should always seek advice from a qualified tax adviser in your own region before making decisions.

United States

• Most prediction market platforms restrict access for US-based participants (Polymarket implements geographic restrictions) — though blockchain-based activity remains technically available
• The IRS classifies crypto holdings as tangible property; each USDC transaction may trigger a taxable event
• Winnings from prediction markets are typically taxed as short-term capital gains (taxed at ordinary income rates when held for less than 12 months)
• Kalshi (operating under CFTC oversight) generates 1099 forms for users; decentralised platforms do not — participants must declare their own income
• Those engaged in full-time trading activity may be eligible for trader status (enabling mark-to-market accounting methods)

United Kingdom

• Possible gambling exemption: returns could be exempt from tax if the activity qualifies as gambling under UK law
• If treated as an investment: a £3,000 capital gains tax allowance applies annually as of 2026
• Income-generating trading activity is classified as self-employment income — National Insurance contributions may be due
• HMRC has yet to issue clear guidance on how prediction markets should be categorised for tax purposes

Germany

• §23 EStG provision: gains from private asset sales below €600 annually are not taxable
• Holding USDC for longer than 12 months: gains may be exempt under German cryptocurrency tax rules
• Regular or active trading typically results in income tax liability
• Glücksspielgewinne (gambling winnings) are ordinarily not subject to tax — though the regulatory status remains ambiguous

Australia

• The ATO considers crypto to be a capital asset: capital gains tax applies when you dispose of holdings
• A 50% reduction in capital gains tax is available for assets retained for at least 12 months
• Gambling-derived income is usually tax-exempt provided you are not classified as a professional gambler

Best Practices Globally

• Export your full transaction record from PolyGram for use in tax calculations
• Leverage crypto accounting platforms (Koinly, CoinTracking) to determine your gains and losses
• Maintain comprehensive documentation of every USDC transaction, including conversion to and from fiat currency
• Engage with a tax professional who specialises in cryptocurrency matters within your country

FAQ

Does PolyGram report my earnings to tax authorities?

PolyGram presently does not furnish tax documentation to its users. You bear sole 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 classified as a cryptocurrency asset and is therefore subject to identical taxation rules as Bitcoin or Ethereum. Although its price stability makes gain computation more straightforward, this does not alter the underlying tax classification.

What records should I keep?

Retain documentation for every trade including the date, quantity, entry and exit prices, and final outcome. PolyGram allows you to download your transaction history — ensure you retrieve this on a regular basis.