The tax consequences of prediction market earnings differ substantially across jurisdictions and hinge on variables such as trading volume, whether trading constitutes your primary occupation, and the way your country's tax authorities treat USDC-denominated transactions. This overview covers the principal considerations — you should always seek guidance from a qualified tax adviser in your own country.
United States
- Most prediction market platforms restrict access from US-based users (Polymarket implements geographic blocking) — though on-chain trading remains technically available
- The IRS classifies crypto holdings as property; every USDC transaction may trigger a taxable event
- Earnings from prediction markets are ordinarily taxed as short-term capital gains (at standard income tax rates if positions are closed within 12 months)
- Kalshi, which operates under CFTC regulatory oversight, issues 1099 forms to traders; decentralised platforms do not — participants must file their own returns
- Active traders may qualify for trader tax status, enabling mark-to-market treatment
United Kingdom
- A gambling exemption may apply: returns could be non-taxable if the activity qualifies as gambling
- Capital gains taxation applies if classified as investment: the £3,000 annual CGT allowance remains in effect for 2026
- Income classification for professional trading — National Insurance contributions may be due
- HMRC guidance on prediction markets remains non-specific and lacks authoritative clarity
Germany
- §23 EStG provides relief: private transaction gains below €600 annually escape taxation
- USDC held beyond one year: profits may qualify for exemption under German cryptocurrency tax law
- Regular trading activity typically falls under income tax provisions
- Glücksspielgewinne (gaming proceeds) ordinarily avoid taxation — though application to prediction markets remains ambiguous under the GlüStV framework
Australia
- The ATO categorises crypto as property: capital gains tax applies upon realisation
- Assets retained for 12 months or longer qualify for a 50% CGT reduction
- Gaming winnings typically escape tax unless the participant operates as a professional gambler
Best Practices Globally
- Export your full transaction record from PolyGram to support tax filings
- Employ dedicated crypto accounting tools (Koinly, CoinTracking) to compute gains and losses
- Maintain comprehensive documentation of all USDC movements, including deposits and withdrawals
- Engage a tax professional with cryptocurrency expertise and KYC knowledge in your region
FAQ
- Does PolyGram report my earnings to tax authorities?
- PolyGram does not presently furnish tax documentation to its users. The responsibility for declaring prediction market income rests with each participant according to their local tax laws.
- Is USDC treated differently from volatile crypto for tax?
- Across most jurisdictions, USDC remains subject to the same tax regime as Bitcoin or Ethereum. Although its fixed value streamlines gain measurement, the underlying tax classification remains unchanged.
- What records should I keep?
- Retain all transaction details including timestamps, quantities, entry and exit prices, and settlement outcomes. PolyGram allows you to download your transaction history — ensure you retrieve it on a regular basis.