Taxation of Sports Event Contracts

The explosion of sports event contracts on prediction markets—driven by platforms like Kalshi, Polymarket, Crypto.com, and the CME—was arguably the most disruptive gaming and financial development of 2025. While these platforms have unlocked massive new audiences, they have also ignited fierce regulatory scrutiny and deeply fractured the industry. The fallout is already visible, highlighted by multiple ongoing legal cases and recent decisions from major stakeholders to exit the American Gaming Association. Part of navigating this volatility also means understanding the potential tax implications involved. This article takes a deeper dive into the high-stakes tax landscape of prediction markets and how that may impact the bottom line for investors, market makers, and operators.