Prediction market gains are usually taxable, but how depends on your country: some treat them like gambling winnings, some like capital gains on a financial contract, and on crypto platforms such as Polymarket, moving into and out of crypto can be a taxable event of its own. In the United States there is no specific IRS guidance on event contracts as of 8 November 2026. This page explains the questions to ask and points to primary sources; it is not tax advice. Ask a tax professional where you live.
How are Polymarket winnings taxed?
Three things usually matter, wherever you are:
- What the contract is under your law: a bet, a derivative, or a crypto-asset. That decides whether gains are taxed, at what rate, and whether losses count.
- When the gain happens: when you sell a share or when the market resolves, not when you withdraw.
- The crypto legs: buying USDC or pUSD with another crypto-asset, or selling USDC for cash, can be a disposal with its own gain or loss in many countries. pUSD and USDC track $1, so the gain is often small, but the record still matters.
Polymarket taxes in the US
- The IRS has not issued guidance specific to prediction markets. Practitioners disagree on whether gains are gambling income, capital gains, or Section 1256 contracts for regulated exchanges.
- If treated as gambling, losses are deductible only as an itemised deduction up to gambling winnings, and from 2026 federal law limits that deduction to 90% of losses.
- Crypto disposals are reported as property transactions (IRS: digital assets).
- Form 1099. Regulated US exchanges may issue tax forms; the international Polymarket platform is closed to US users for new positions. Not receiving a form does not make a gain untaxed.
Polymarket taxes in the UK
- HMRC does not tax betting winnings of individuals who are not trading as a business (HMRC Business Income Manual).
- Gains on disposing of crypto-assets are subject to Capital Gains Tax (HMRC Cryptoassets Manual).
- Whether an on-chain event contract is a bet, a contract for differences or a crypto-asset has no HMRC guidance of its own. In practice UK residents cannot open positions on Polymarket's international platform.
Other countries
| Country | Points to check |
|---|---|
| France | Occasional gambling winnings are generally untaxed; crypto disposals into euros are taxed at the flat rate. Polymarket is close-only. |
| Germany | Crypto held under a year is taxed on disposal above an annual allowance; gambling winnings generally untaxed. Polymarket is close-only. |
| Canada, Australia | Gambling versus business income tests; crypto is property. Polymarket is close-only in Australia and parts of Canada. |
| Elsewhere | Ask whether event contracts are bets or financial instruments, and how crypto disposals are taxed |
Country rules change often; check the national tax authority's own pages. Who can trade at all: restricted countries.
What records should I keep?
- Every deposit and withdrawal, with date, amount, token and network.
- Every trade: market, side, shares, price, fees, date. Polymarket's Data API returns a wallet's full activity (
/v2/activity?user=<address>); see wallet lookup. - Every resolution and redemption.
- Nimb's portfolio shows your positions and realised P&L, but it is not a tax report.
Frequently asked questions
Do you pay tax on prediction market winnings?
In most countries some tax can apply, either as gambling, capital gains or income. The rate and the treatment of losses depend on the country.
Does Polymarket send a 1099?
US tax forms come from regulated US platforms where applicable. A missing form does not change whether tax is due.
Are Polymarket losses deductible?
It depends on how your country classifies the contracts. Keep records either way.
Is withdrawing from Polymarket a taxable event?
The trade or resolution is usually the event; converting USDC to cash can be a separate crypto disposal in some countries.
Last reviewed 8 November 2026 · Data from Polymarket · Not financial advice · Nimb is not affiliated with Polymarket.