Prediction Market Taxes in Florida: What Traders Need to Know
How federal taxes apply to your Kalshi and Polymarket gains — and why Florida's no-state-income-tax status is a real edge.
- The Good News: Florida Has No State Income Tax
- Federal Tax Treatment of Prediction Market Winnings
- Do Kalshi and Polymarket Report to the IRS?
The Good News: Florida Has No State Income Tax
Florida is one of nine states with no state income tax. That means prediction market winnings are not subject to Florida state tax — only federal taxation applies. This is a genuine financial advantage compared to residents of states like California (up to 13.3%) or New York (up to 10.9%).
Federal Tax Treatment of Prediction Market Winnings
Prediction market profits are taxable at the federal level. We are not tax advisors — consult a tax professional for your specific situation.
Short-term vs. long-term
Most prediction market contracts resolve within days or weeks, making them short-term positions. Short-term capital gains are taxed at ordinary income rates (10%–37%). For longer-duration contracts — like a Florida governor race contract held more than a year — long-term capital gains treatment may apply (0%, 15%, or 20%), but this requires professional guidance.
How gains are calculated
Gain = (Payout received) – (Amount paid for contracts) – (Fees paid)
Example: You buy 100 Dolphins contracts at $0.45 = $45 cost. Dolphins win, you receive $100. Kalshi fee: $1.50. Taxable gain: $100 – $45 – $1.50 = $53.50.
Losses
Losing trades generate capital losses, which can offset gains. If you have $200 in gains and $80 in losses in a tax year, you're taxed on the net $120.
Do Kalshi and Polymarket Report to the IRS?
Yes. Like other financial platforms, Kalshi issues 1099 forms to US-based traders who meet reporting thresholds. Keep records of all your trades regardless of whether you receive a 1099.
Best practice: Export your full trade history from both platforms at year-end. Both have CSV export functions in account settings. Store these records for at least 3 years.
Crypto Complications (Polymarket)
Polymarket's global platform operates on blockchain rails (Polygon network) using USDC stablecoin. Depositing and withdrawing USDC may trigger crypto tax events; each on-chain trade generates a transaction record. Crypto tax software like Koinly or CoinTracker can import Polymarket history. The US Polymarket app (launched late 2025) aligns more closely with Kalshi for tax purposes.
Practical Tax Tips for Florida Traders
- 1.Track every trade — use a spreadsheet or export from Kalshi monthly
- 2.Keep Kalshi and Polymarket records separate for clean calculation
- 3.Include fees — they reduce your taxable gain
- 4.Don't forget small wins — there's no de minimis threshold for capital gains
- 5.Use a tax professional — if you trade actively (50+ trades/year) or have meaningful gains ($1,000+)
- 6.Remember Florida's advantage — no state tax means your effective rate is purely federal
Frequently Asked Questions
Everything Florida residents need to know about legally trading sports, politics, and hurricane markets on Kalshi and Polymarket in 2026.
Related guides
Pillar pages
Sources & references
- 1.IRS — Topic No. 419, Gambling Income and Losses — IRS.gov
- 2.IRS — About Form 1099-MISC — IRS.gov
External links open in a new tab. We cite primary regulatory and major news sources where possible. Citations to trusted regulators (CFTC, SEC, IRS, NOAA, .gov, .edu) are dofollow; commercial outbound links are not endorsements.
Fifteen years in regulated gambling: that's Catie Di Stefano's track record, beginning at Betsson Group in Malta and continuing through nearly five years at Gaming Innovation Group (GiG).
She went on to run an independent consultancy across European and US iGaming brands — including a licensed engagement with Hard Rock Hotel & Casino Atlantic City under a New Jersey DGE vendor license — and spoke publicly on Florida's gaming market as early as 2022, at a Next.io panel in New York.