Regulation/Legal: Prediction Markets & Sportsbooks in Tax and Policy Crosshairs

Regulation/Legal: Prediction Markets & Sportsbooks in Tax and Policy Crosshairs

• IRS tax loophole focus: A Barron’s report highlights how prediction markets (e.g., Kalshi/Polymarket) may be taxed under futures/capital‑gains rules versus ordinary income on sportsbook winnings — drawing IRS scrutiny and legal questions. Barron’s

• Court + regulatory tension remains: States and regulators continue pushing back, with legal ambiguity on prediction markets’ classification and whether contract markets are traditional gambling under state law. iGB

• Industry pivot: This fight now intersects tax law, regulatory authority, and gambling law — setting up 2026 challenges that could redefine enforcement and taxation. Barron’s

TRI‑STATE HEAT

New York

• In‑play betting under legislative fire: A new Assembly bill would ban in‑play (live) sports wagering statewide, targeting a core revenue/engagement driver while framing it as consumer protection. iGaming Today

New Jersey

• No verified major updates in the last 48 hours.

Pennsylvania / Philadelphia

• No verified major updates in the last 48 hours.

GLOBAL GAMBLING BUZZ

• UK black‑market surge: Illegal bookmakers expected to handle ~£100 M in Boxing Day bets amid high taxes — spotlighting regulated market share erosion and harm to consumer protections. The Sun

• Nevada regulator clarity: States like Nevada are formalizing that prediction markets’ event contracts can legally constitute wagering and require licensed sportsbook oversight — adding friction to expansion. SBC Americas

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