Prediction Market Event Contracts: A Tax Classification Analysis

A federal tax classification analysis of prediction market event contracts, co-authored with the former head of the IRS Office of Digital Assets.

The article examines how the same transaction may be characterized as a wagering transaction under section 165(d), a section 1256 contract, or capital or ordinary under the general rules, and addresses the gap in formal IRS guidance covering more than $44 billion in 2025 prediction market trading volume.

Read the full report here.