World Cup bets on prediction markets may get tax edge over gambling
Bloomberg reports that Americans betting on the World Cup through CFTC-registered prediction markets may owe less federal tax than peers using traditional sportsbooks. The article examines the divergent tax treatment between the two wagering channels without detailing specific rate differences or regulatory mechanisms. The distinction turns on how prediction-market winnings are classified relative to gambling income. Both Kalshi and Polymarket, which drove record World Cup volume, stand to benefit if the gap holds.
A softer tax rate on prediction-market winnings would widen the cost advantage CFTC-registered platforms already hold over state sportsbooks. World Cup volume set records for Kalshi and Polymarket; retaining more of those gains in traders' pockets builds repeat usage and deepens liquidity. Sportsbooks would face pressure to match net payouts or lose high-value event bettors.
The gap also complicates state revenue projections: North Carolina just imposed a 6% prediction-market tax assuming parity with sportsbook levies, and a federal classification that treats the two channels differently undercuts that logic. A formal IRS ruling or Treasury clarification would settle the matter, but until then operators must market the possible edge without promising it. The risk is regulatory whiplash if Congress or the CFTC later harmonizes treatment upward.