DraftKings Predictions Taxes, IRS Reporting & Fees

Last Updated on November 6, 2026 by Patrick Camuso, CPA

Tax forms, trading records and federal treatment for DraftKings Predictions.

Quick Answer

DraftKings Predictions activity can produce gains, losses and other amounts that require federal income tax analysis. The treatment depends on the particular contract, the taxpayer’s circumstances and how the position was acquired and concluded. Depending on those facts, the analysis may involve IRC §165(d), general capital and ordinary income rules, §1234A, §1256 and, for qualifying taxpayers and instruments, §475.

DraftKings Predictions currently provides access to contracts from several markets, including DKeX, CDNA and CME. The records should identify the contract traded, the market on which it was listed, the executions that created or changed the position, the fees charged and the amount received when the position was sold or settled.

DraftKings also contemplates federal tax reporting for Predictions accounts, although its public guidance does not currently assign one information return and reporting threshold to all ordinary Predictions trading. Tax documents furnished for the account should be reconciled to the underlying transaction history.

How DraftKings Predictions Works

DraftKings launched Predictions in December 2025 as a separate event contract product.

The operating structure has changed since launch. DraftKings’ current Predictions Terms identify GUS III LLC, doing business as DraftKings Predictions, as a CFTC registered futures commission merchant and NFA member. The Terms also describe a role for Wedbush Securities in processing transactions and providing access to designated contract markets and clearing organizations.

DraftKings’ current Rules and Settlements materials identify DKeX, CDNA and CME as market sources. A customer may see those contracts through the same DraftKings interface, but the governing exchange rules, settlement provisions and fee schedules can differ.

Historical activity should be reconstructed using the arrangements that applied when the trade occurred. Current product documentation may not describe every feature of the offering as it existed during an earlier period.

The market source should remain part of the tax record. It helps establish the contract terms, exchange rules and settlement mechanics that applied to the transaction.

DraftKings Predictions and Sportsbook Use Different Records

DraftKings Predictions maintains a separate wallet from DraftKings Sportsbook and other DraftKings products.

For a Predictions account, the relevant records include the contracts traded, market source, execution history, fees and settlement activity. Sportsbook records do not provide that transaction history.

DraftKings also publishes different tax document guidance across its product lines. Its current Key Tax Dates materials identify Form 1099-MISC for specified Daily Fantasy and Pick6 activity and Form W-2G for qualifying activity in Sportsbook, Casino, Pools and Horse Racing. Predictions is not separately assigned a form in that table.

The Predictions Terms contain their own tax provisions and contemplate electronic delivery of applicable tax information. A taxpayer should review the documents actually furnished for the Predictions account and reconcile them to the trading records.

Our Prediction Market Tax Guide addresses the broader federal tax framework for event contracts.

Preserve the Trading and Settlement History

DraftKings Predictions allows customers to acquire positions, change them before a market closes and hold them through settlement where permitted under the applicable contract.

The accounting should preserve the executions that created and changed each material position. If a customer purchases contracts and later sells some or all of them, the file should retain the quantities, prices, dates and transaction costs associated with those trades.

For a position held through resolution, retain the contract terms, resolution information and actual settlement amount. Voids, corrections, refunds and other adjustments should remain identifiable as well.

These records are important because federal tax treatment depends in part on what actually happened to the contractual position. A transfer of an existing contractual right before resolution can present different questions from a position that remains outstanding through settlement or another form of termination.

Combination contracts require the same level of documentation. DraftKings permits multiple selections to be combined under specified terms. The tax and accounting records should follow the contract actually traded and the settlement rules that applied to it.

Funding, Withdrawals and Account Reconciliation

DraftKings Predictions uses its own wallet. Deposits, withdrawals and transfers should be reconciled separately from the trading activity.

A customer may deposit funds, purchase several positions, sell some of them, receive settlement proceeds on others and later withdraw cash. The amount withdrawn can include original funding, trading proceeds, promotional amounts and other account activity.

The position history should establish the transactions that produced the economic result. The cash history should reconcile those transactions to the account balance.

Internal transfers and other account movements should also be identified according to what occurred. They can be important to the reconciliation without representing a separate contract trade or settlement.

DraftKings Predictions Fees

DraftKings publishes a separate fee disclosure for Predictions. Fees can vary based on the contract and the market through which it is offered.

For historical transactions, retain the fee actually charged on the execution. Fee schedules can change, and a current schedule may not reflect the terms that applied to an earlier trade.

The federal treatment of those costs depends on the underlying transaction and the applicable tax rules. Transaction level fee data should remain available so the amounts can be incorporated into basis, amount realized or another tax item where appropriate.

An account performance figure net of fees can help reconcile the account, but the transaction records provide the detail needed for tax reporting.

Predictions Dollars and Other Promotions

DraftKings has offered Predictions Dollars and other promotional credits under program specific terms.

The terms of a particular promotion should be preserved with the account history. Relevant records include the amount awarded, restrictions attached to the credit, how it was used and any cash or other value later received. Expiration or forfeiture should also be retained where relevant.

The tax treatment depends on the rights created by the promotion and what later occurs. DraftKings’ general Predictions Terms also contemplate information reporting or withholding for promotional prizes where applicable.

Keeping the original award and the later trading activity separate in the records can also prevent the same economic benefit from being counted twice.

What Records Does DraftKings Predictions Provide?

DraftKings provides in product trading information through its Predictions interface, including information concerning open and settled positions. Its Terms also contemplate transaction confirmations and disclosure of applicable fees.

For material activity, the tax file should identify the contracts traded, originating markets, execution dates, quantities, prices, transaction costs, later position changes and contractual settlements. Material corrections, refunds and promotional activity should also remain identifiable.

Positions open at year end should be separated from completed transactions. Deposits, withdrawals and transfers should reconcile to the account without replacing the underlying trading history.

DraftKings’ public materials do not currently establish that every customer receives one year end tax ready file containing all of this information. Available account records should be preserved while they remain accessible.

The Predictions Terms separately state that applicable tax information will be made available electronically and retained for at least seven calendar years following the relevant tax year. That provision concerns tax information and should not be read as a statement about the retention period for every underlying transaction record.

Our Prediction Market Accounting Guide discusses the broader reconciliation process.

Does DraftKings Predictions Issue Tax Forms?

DraftKings’ current materials contemplate federal tax reporting for Predictions activity.

The Predictions Terms provide for electronic delivery of applicable tax information and require taxpayer identification information in relevant circumstances. Promotional terms also address tax reporting for certain payments.

DraftKings’ general Key Tax Dates page gives more specific guidance for several other products. It identifies Form 1099-MISC for specified Daily Fantasy and Pick6 activity and Form W-2G for qualifying activity in Sportsbook, Casino, Pools and Horse Racing. Predictions is not assigned a separate form and threshold in that table.

A taxpayer should review the documents actually furnished for the Predictions account and compare them with the transaction history. Differences may require additional work to identify the transactions covered by the form and the federal treatment applied to them.

The absence of an information return does not eliminate the need to analyze the underlying activity. The contracts and account records remain the primary evidence of what occurred during the year.

Our Prediction Market Tax Documents and IRS Reporting Guide discusses these reporting issues in greater detail.

How Are DraftKings Predictions Gains and Losses Taxed?

Federal tax treatment should be evaluated using the particular contracts and transactions involved.

Relevant facts include the rights and obligations created by the contract, the market on which it traded, the taxpayer’s capacity and how the position was acquired and concluded. Potentially relevant provisions include §165(d), general capital and ordinary income rules, §1234A, §1256 and §475.

Section 165(d)

Section 165(d) may require consideration for particular event contracts.

The analysis depends on the contract and transaction, including the rights created, the reference event, the market structure and the manner in which the position is resolved. The contract should be evaluated under the applicable federal tax authorities before applying the wagering loss rules.

Where §165(d) applies, the current limitation can materially affect the federal result. For taxable years beginning after December 31, 2025, deductible wagering losses are generally limited to 90% of qualifying losses and may not exceed gains from wagering transactions. Certain otherwise allowable deductions incurred in carrying on wagering transactions are included within that limitation.

Capital and ordinary characterization

Where §165(d) does not govern the transaction, the analysis may proceed under the general federal rules applicable to contractual property and the taxpayer’s activities.

An acquired contractual right may require consideration under §1221 and related authorities. How the position is concluded can also affect the analysis. A disposition before resolution can present different questions from contractual settlement or another form of termination.

Section 1234A may require consideration where its statutory requirements are satisfied. Taxpayer capacity and other statutory provisions can affect the result as well.

Our Prediction Market Tax Guide examines these characterization issues in greater depth.

Section 475

Section 475 imposes mark to market rules on dealers in securities and provides elective mark to market regimes for qualifying dealers in commodities and qualifying traders in securities or commodities.

Application requires analysis of the taxpayer, the instruments involved and any applicable election requirements. The taxpayer’s trading activity is part of that analysis, but volume alone does not determine whether a §475 regime applies.

Section 1256

Section 1256 requires analysis of the particular instrument.

DraftKings Predictions provides access to contracts from multiple markets. The originating market and contract specifications should remain part of the tax file so the applicable statutory category can be evaluated.

A contract must fall within an affirmative §1256 category and satisfy the requirements associated with that category. The regulated futures contract definition, for example, includes requirements involving the qualified exchange and the applicable margin or mark to market system. Section 1256 also contains exclusions for specified swaps and similar agreements.

Our Section 1256 and Prediction Markets Guide examines those requirements in greater detail.

Platform P&L and Federal Tax Reporting

DraftKings account balances and performance information can help reconcile trading activity.

The federal tax computation may require additional detail where the account contains positions sold before resolution, contractual settlements, fees, promotional amounts and positions remaining open at year end.

The workpapers should connect the amounts reported on the return to the underlying contracts and transactions. Any material difference between the tax computation and a platform performance figure should be traceable to the supporting records.

Recordkeeping for Higher Volume Accounts

A taxpayer with substantial DraftKings Predictions activity may need more detailed records than an occasional user.

The tax file should preserve the contracts, market sources, executions, transaction costs, position changes, settlements and material account adjustments needed to explain the annual result.

DraftKings’ current Terms also contain account use restrictions. They limit the service to personal, non commercial use and restrict unauthorized automated trading tools. Certain regulated financial professionals and related persons are subject to additional eligibility provisions.

Those contractual restrictions should be reviewed separately where a taxpayer’s Predictions activity forms part of a broader professional or business trading operation.

Where the taxpayer uses other prediction market platforms, DraftKings activity should remain separately identifiable until the account has been reconciled.

Final Thoughts

DraftKings Predictions gives customers access to event contracts from several regulated markets through one interface. The underlying contract and transaction records remain the foundation of the tax file.

For material activity, preserve the originating market, contract terms, executions, fees, settlement details, promotional activity and account movements needed to explain the annual result. Tax documents and platform performance reports can then be reconciled to those records.

Federal treatment depends on the particular contracts, transactions, taxpayer circumstances and applicable authorities.

Frequently Asked Questions About DraftKings Predictions Taxes

Are DraftKings Predictions taxable?

DraftKings Predictions activity can produce gains, losses and other reportable amounts. The treatment depends on the contracts, transactions and taxpayer circumstances.

Does DraftKings Predictions issue tax forms?

DraftKings’ Terms contemplate Predictions related tax information where applicable. Current public guidance does not identify one specific information return and threshold for all ordinary Predictions trading.

Does DraftKings report Predictions activity to the IRS?

DraftKings’ materials contemplate federal information reporting for applicable Predictions related amounts. Taxpayers should review the documents furnished for their accounts and reconcile them to the transaction history.

Are DraftKings Predictions taxed like DraftKings Sportsbook?

The products use separate account, contractual and reporting structures. Predictions activity should be analyzed using the contracts and transactions in the Predictions account.

Are DraftKings Predictions contracts Section 1256 contracts?

The answer depends on the particular instrument and the statutory category being considered. The originating market and contract specifications are part of that analysis.

How are DraftKings Predictions fees treated?

The treatment depends on the underlying transaction and applicable tax rules. Transaction level fees should remain identifiable in the tax records.

How are Predictions Dollars taxed?

The analysis depends on the terms of the promotion, restrictions on the credit, how it is used and what value is ultimately received.

Do I have to report DraftKings Predictions activity without a tax form?

Federal reporting depends on the underlying activity and applicable law. The transaction records remain relevant even where no information return is furnished.

Prediction Market Accounting and Tax Services

Camuso CPA works with taxpayers with material prediction market activity on transaction accounting, reconciliation, federal tax characterization and reporting.

Where DraftKings Predictions records are incomplete or the account does not reconcile, the work may begin with Prediction Market Accounting and transaction reconstruction. Where the activity is established but the federal treatment requires additional analysis, the work may involve Prediction Market Tax Reporting or contract specific tax research.

Learn more about our Prediction Market CPA services.