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How Prediction Markets Are Quietly Costing States Millions in Taxes
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Subscribe11 MAR 2026 / ACCOUNTING & TAXES
As the popularity of federally regulated prediction platforms like Kalshi and Polymarket rises, states face a significant revenue gap due to the differing tax structures between state-regulated sportsbooks and these platforms. The American Gaming Association estimates potential losses exceeding $570 million annually in state tax revenue as bettors migrate from licensed sportsbooks, taxed up to 51%, to prediction markets which may pay zero state tax in certain regions.
Picture two friends placing the same Super Bowl wager. One taps the app on FanDuel in New York. The other places a near-identical contract on Kalshi from the same couch. Same bet, same risk, same outcome. Yet the tax trail behind those two taps looks comp...
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