Last Updated on April 13, 2026 by Patrick Camuso, CPA
Wired published a piece examining the tax reporting challenges facing prediction market traders following the explosive growth of platforms like Kalshi and Polymarket. Patrick Camuso, CPA was quoted in the article alongside market participants.
The piece centers on a guidance vacuum that has left taxpayers and preparers without a clear framework. The IRS has not issued official guidelines on how prediction market gains and losses should be reported, which means practitioners are assessing positions on a case-by-case basis under significant ambiguity. As Wired notes, platforms like Kalshi saw over $12 billion in monthly trade volume this past March, meaning the question of how to handle prediction market taxes has shifted from niche to urgent.
Patrick Camuso’s comment in the article addresses both the complexity of the characterization question and Camuso CPA’s approach to it:
You have a vacuum of guidance. It puts the taxpayer in a bad position.
The article also draws on Patrick’s description of prediction markets as “a mix of wagering, derivatives, and investment contracts all mixed together in a unique bucket” and notes that Camuso CPA generally takes a more conservative position for most clients due to the ambiguity around the applicable tax rules.
This is exactly the kind of unsettled area where getting the characterization wrong at filing creates compounding problems. Whether prediction market contracts are treated as capital assets, ordinary assets, derivatives subject to Section 1256, or gambling income changes the tax rate, the loss deductibility rules, and the reporting format. None of those positions have been confirmed by the IRS, and the platform-issued tax documents do not resolve the underlying characterization question.
Read the full Wired article here.
For traders navigating prediction market tax reporting this season, our prediction market tax reporting services and prediction market tax guide cover the full characterization analysis and reporting framework. Work with a crypto CPA established in this market since 2016.
For general practice CPAs, financial advisors, and attorneys whose clients have prediction market activity requiring specialist analysis, Camuso CPA operates as a white-label partner. We handle the characterization work and reporting while you maintain the client relationship. Learn more about our CPA and advisor partnership program.
