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 views USDC-denominated transactions. This overview covers the principal requirements in major markets — you should always seek guidance from a qualified tax advisor familiar with your own circumstances.
United States
- Most prediction market platforms restrict access for US-based participants (Polymarket implements geographic restrictions) — though on-chain trading remains technically available
- The IRS classifies crypto holdings as property; each USDC transaction may trigger a taxable event
- Earnings from prediction markets are ordinarily treated as short-term capital gains (taxed at ordinary income rates for positions held under 12 months)
- Kalshi (operating under CFTC oversight) generates 1099 forms for users; decentralised platforms do not — meaning traders must file their own returns
- Active traders might 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
- If treated as investment activity: the £3,000 annual capital gains allowance applies in 2026
- Income classification for professional traders — National Insurance contributions may be due
- HMRC guidance on prediction markets remains non-specific and evolving
Germany
- §23 EStG provision: private transaction gains below €600 annually are exempt
- Holding USDC for over 12 months: gains may be exempt under German cryptocurrency tax law
- Regular or intensive trading typically results in income tax classification
- Glücksspielgewinne (gambling prize money) generally escape taxation — though the categorisation of prediction markets remains ambiguous
Australia
- The ATO classifies crypto as property: capital gains tax applies upon sale or transfer
- A 50% reduction in capital gains tax applies for assets retained beyond 12 months
- Gambling prizes are ordinarily non-taxable unless the participant qualifies as a professional gambler
Best Practices Globally
- Export your full transaction record from PolyGram to support your tax filing
- Employ dedicated crypto accounting tools (Koinly, CoinTracking) to determine gains and losses
- Maintain documentation for every USDC movement, including deposits and withdrawals
- Engage a tax professional with expertise in cryptocurrency matters for your region
FAQ
- Does PolyGram report my earnings to tax authorities?
- PolyGram does not currently furnish tax documentation to participants. You bear the responsibility for declaring prediction market income according to your local tax rules.
- Is USDC treated differently from volatile crypto for tax?
- Across most jurisdictions, USDC remains a cryptocurrency asset subject to identical tax treatment as BTC or ETH. Though its price stability makes gain computation more straightforward, the underlying tax framework remains unchanged.
- What records should I keep?
- Retain all transaction details: date, size, entry and exit prices, and settlement result. PolyGram allows you to download your transaction history — save copies on a regular basis.