World Cup bets may be taxed differently on prediction markets than at a sportsbook

Americans betting the World Cup through prediction markets may face lighter tax treatment than those using sportsbooks, reported by Caitlin Reilly at Bloomberg. The One Big Beautiful Bill Act amended Section 165(d) so wagering losses are deductible at 90 percent of the loss, and only against wagering gains. Proposed rules published April 17 would write that limit into the regulations.

The math bites at break even. Gross winnings of $100,000 against gross losses of $100,000 leave $10,000 of taxable income. Event contracts traded on prediction markets are standardized financial instruments, and treating them as investments would allow a full loss deduction. The IRS has published no guidance classifying those contracts. Courts have looked past legal form before when deciding what counts as gambling.