Taxation of earnings from prediction markets differs substantially across jurisdictions and hinges on elements such as trading volume, whether it constitutes your main source of revenue, and your country's stance on USDC-denominated transactions. This overview covers the principal considerations — always engage a qualified tax adviser in your region for personalised guidance.
United States
- Most prediction market platforms restrict access from US-based participants (Polymarket implements geographic restrictions) — though blockchain-based activity remains technically available
- The IRS classifies crypto holdings as property; every USDC transaction may trigger a taxable event
- Winnings from prediction markets are typically categorised as short-term capital gains (taxed at ordinary income rates if held fewer than 12 months)
- Kalshi (overseen by the CFTC) generates 1099 forms; decentralised platforms do not — individuals must report independently
- Active traders may be eligible for trader tax status classification (enabling mark-to-market treatment)
United Kingdom
- Possible gambling exemption: returns might escape taxation if classified as gambling activity
- Investment classification attracts capital gains tax: £3,000 exemption threshold applies for 2026
- Income-generating trading activity is subject to income tax — National Insurance contributions may be due
- HMRC has not issued comprehensive guidance regarding prediction market taxation
Germany
- §23 EStG: gains under €600 annually from private transactions are exempt
- USDC held longer than one year: gains may qualify for exemption under German cryptocurrency tax law
- Regular trading typically results in income tax classification
- Glücksspielgewinne (gaming winnings) are ordinarily exempt — though application to prediction markets remains ambiguous
Australia
- The ATO regards crypto as property: capital gains taxation applies upon sale
- Assets retained for 12 months or longer qualify for a 50% CGT discount
- Gaming winnings are ordinarily not taxable unless the individual is classified as a professional gambler
Best Practices Globally
- Export your full transaction record from PolyGram for use in tax documentation
- Employ dedicated crypto accounting tools (Koinly, CoinTracking) to determine net gains and losses
- Maintain comprehensive documentation of every USDC movement, including deposits and withdrawals
- Seek guidance from an accountant with expertise in cryptocurrency taxation within your country
FAQ
- Does PolyGram report my earnings to tax authorities?
- PolyGram does not presently furnish tax documents to participants. Self-reporting of prediction market returns remains your responsibility in accordance with local law.
- Is USDC treated differently from volatile crypto for tax?
- Across most jurisdictions, USDC remains classified as a cryptocurrency subject to identical tax rules as BTC or ETH. Although its price stability reduces calculation complexity, the underlying tax framework remains unchanged.
- What records should I keep?
- Retain all transaction receipts containing timestamp, quantity, entry and exit prices, and settlement details. PolyGram supplies downloadable transaction records — save these on a regular basis.