The US gambling landscape is poised for a seismic shift starting in 2026, thanks to changes in tax law that could reshape the way bettors engage with traditional casinos and emerging prediction markets. These changes, rooted in President Donald Trump’s ‘One Big Beautiful Bill Act,’ introduce stricter limits on how gambling losses can offset winnings, creating potential ripple effects across the gambling and speculative industries.
How the New Tax Law Impacts Bettors
Under the upcoming rules, gamblers will no longer be able to fully deduct losses against their winnings when filing taxes. This creates scenarios where individuals might owe taxes on ‘phantom income’—taxable income that exists on paper but does not reflect actual gains. This shift alters the tax dynamics for active bettors, making even small winning streaks potentially expensive, while providing no full relief for losses incurred.
This new tax treatment could make traditional gambling through casinos and sportsbooks significantly less appealing. Bettors may find themselves facing higher effective tax burdens and increased costs, compelling many to look for alternative avenues.
Prediction Markets: A Tax-Efficient Alternative
Coinbase, a leading cryptocurrency exchange, anticipates that prediction markets may stand to benefit from this tax law change. Unlike casinos or sportsbooks, prediction markets operate through financial contracts akin to derivatives, which could be subject to different, and often more favorable, tax treatment.
For the tax-conscious bettor, these platforms provide clear reporting and may sidestep some punitive tax measures applied to traditional gambling winnings. Prediction markets cover a wide range of event-based speculation, including sports, elections, and economic outcomes, offering a modern way to engage in speculative activities with a financial edge.
Coinbase’s Investment in Prediction Markets
Coinbase is positioning itself as a leader in this space, having recently partnered with Kalshi to expand access to regulated event contracts. Through this partnership, the platform seeks to serve as a gateway for users looking to speculate on real-world outcomes in a more structured and tax-efficient way.
At the same time, Coinbase has taken a proactive stance in courtrooms, challenging state regulators in Michigan, Illinois, and Connecticut. These legal battles argue that prediction markets fall solely under federal Commodity Futures Trading Commission (CFTC) oversight, which could invalidate state-level restrictions or bans. If successful, this could bring nationwide clarity to prediction markets, boosting their appeal just as traditional gambling loses its tax advantages.
A Potential Transformation for Speculative Activities
As the tax law looms closer, the combination of stricter gambling tax rules and the rise of prediction markets could fundamentally change how Americans engage with betting. This shift may not be driven by preference alone but by the economic and regulatory landscape, offering prediction markets a structural advantage in this new era.
For those eager to explore prediction markets, platforms like Coinbase offer a trusted gateway to regulated event-based trading. By aligning itself with the growing demand for decentralized finance solutions, Coinbase aims to redefine the speculative experience while providing participants with potential tax efficiencies.
Stay Informed on the Latest Crypto Trends
If you’re interested in the evolving cryptocurrency and blockchain space, staying up to date is crucial. From Bitcoin trends to DeFi innovations and NFT updates, make sure you’re equipped with timely insights to navigate this fast-changing industry.
