How prediction apps like Polymarket are redefining gambling

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• Prediction market winnings are generally taxed as ordinary income, but some CFTC-regulated platforms like Kalshi may qualify for favorable Section 1256 capital gains treatment, making them potentially more tax-efficient than traditional sports betting

  80% confidence

• Despite prediction markets being less well-known than traditional polls, platforms like Kalshi and Polymarket proved their worth during the 2024 Presidential Election

  80% confidence

• Since Kalshi's 2024 legal victory, prediction markets have expanded to offer event contracts based on crypto, climate, economics, financials, companies, and—most controversially—sports

  80% confidence

• Prices can become more volatile near elections or big data releases, as these contracts can represent highly volatile events

  80% confidence

• Media outlets and the public were previously unaware of the accuracy of prediction markets, even though academic research had long supported their effectiveness

  80% confidence

• Political event contracts are akin to gaming and contrary to the public interest

  80% confidence

• While these markets have existed in the U.S. for decades, their use expanded rapidly last year after Kalshi, a federally regulated derivatives exchange and clearinghouse, began offering contracts based on the outcome of political events

  80% confidence

• Prediction markets burst onto the American marketplace in the fall of 2024, and their popularity has only grown since

  80% confidence