How will the IRS rule regarding prediction market income?
3
340Ṁ452031
11%
Gambling Income
44%
Capital Gains
23%
Commodity Trading (60% long term capital gains, 40% short term capital gains)
11%
Self employed income
11%
Other
Currently there is no ruling by the IRS on how to treat prediction market income from prediction market exchanges like PredictIt, Betfair, Smarkets, Polymarket, Insight Prediction and others.
This applies to prediction markets that work on the exchange model - where shares are tradeable. It does not apply to fixed odds (sportsbook) type markets which I think the IRS may rule differently.
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Old article that predicts the IRS will go for treating income as forward contracts for commodities and thus tax it as commodities are taxed (the 60/40 method).
https://www.thefreelibrary.com/Predicting+the+taxation+of+prediction+markets.-a0181500075
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