Coinbase Explains How New US Tax Rules Could Hurt Gamblers and Boost Prediction Markets

Coinbase believes a fundamental US tax switch could per chance per chance well vastly alter how gamblers contrivance bets beginning in 2026. In its most modern outlook, the crypto switch argues that a provision in President Donald Trump’s “One Tall Beautiful Invoice Act” could per chance per chance well unintentionally push gamblers faraway from worn casinos and sportsbooks and toward prediction markets as one more.

The regulation, signed in mid-2025, introduces fresh limits on how playing losses will be deducted against winnings, changing the tax math for frequent bettors.

Why Damaged-down Gamblers Might maybe presumably Face Better Tax Bills

Below the fresh rules, gamblers will now now not be ready to completely offset losses with winnings when submitting taxes. Coinbase warns this could per chance presumably lead to scenarios where participants owe taxes on “phantom income,” which suggests they are going to be taxed on wicked winnings even within the event that they indirectly misplaced money total.

For active bettors, this creates a less favorable tax ambiance. Even diminutive a hit streaks could per chance per chance well characteristic off taxable income, whereas losses wouldn’t be fully known, raising effective tax burdens and extending the associated price of worn playing.

Prediction Markets Produce a Attainable Edge

Coinbase argues that prediction markets could per chance per chance well clutch pleasure in this shift. Now not like sportsbooks, prediction markets operate the exhaust of monetary contracts corresponding to derivatives, which could per chance per chance well descend below different tax medication than playing winnings.

As a outcome, tax-unsleeping users could per chance per chance well rep prediction markets more efficient, particularly within the event that they present clearer reporting and fewer punitive tax outcomes. Coinbase sees this as a structural profit that could per chance per chance well drive broader adoption of match-essentially essentially based procuring and selling, covering areas such as sports actions, elections, and economic outcomes.

Coinbase’s Strategic Hobby within the Sector

Coinbase’s stance is carefully tied to its delight in industry approach. The switch has now not too lengthy ago committed to expanding access to prediction markets through a partnership with Kalshi, positioning itself as a gateway for regulated match contracts.

On the identical time, Coinbase has taken an aggressive ethical stance to guard this expansion. The firm is for the time being suing regulators in Michigan, Illinois, and Connecticut, arguing that prediction markets descend exclusively below federal oversight by the Commodity Futures Purchasing and selling Commission (CFTC), now not announce playing authorities.

A Broader Regulatory and Market Strive against

Coinbase maintains that Congress has already granted the CFTC sole authority over prediction markets, making announce-stage bans or restrictions invalid. These proceedings replicate a broader wrestle over whether prediction markets ought to peaceful be handled as monetary devices or playing merchandise.

If courts facet with Coinbase, prediction markets could per chance per chance well compose nationwide readability correct as tax rules affect worn playing less beautiful. That aggregate, Coinbase suggests, could per chance per chance well reshape how American citizens speculate on real-world outcomes, now not by replacement alone, nevertheless by economics and regulation.

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