PROPHETX TAXES FOR TEXANS
Texas takes nothing. The IRS does. Here's the practical version for anyone trading sports contracts from Dallas, Houston, Austin or San Antonio.
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ProphetX: Trade $50, Earn $75!
TXPREDICTSNew users only. T&Cs apply. ProphetX's minimum age is 18 (or the local age of majority if higher); we recommend 21+. Not available in Nevada. Trading involves risk.
Do Texans pay state tax on ProphetX profits? No. Texas has no personal income tax, so your only exposure is federal. ProphetX settles in US dollars on a CFTC-regulated venue, which makes the paperwork more straightforward than a crypto-settled platform.
(opens in a new tab)What's actually settled (September 2026)
Profits from prediction markets such as Kalshi and Polymarket US are taxable, but the IRS has not yet issued guidance on how event contracts should be classified. Depending on the facts, tax professionals have argued they could be treated as gambling income, as ordinary income or capital gains, or, more aggressively, as Section 1256 contracts with 60/40 long/short-term treatment; none of these positions has been confirmed by the IRS. The classification matters: from 2026, gambling losses are deductible only up to 90% of losses. Platforms generally do not issue a single 1099 covering your trading profits. Kalshi, for example, issues 1099s for interest, rewards and crypto transfers and provides a profit-and-loss statement for your trades, so keep your own records. This is general information, not tax advice; consult a qualified tax professional.
We earn a commission if you sign up through these offers. 21+.
ProphetX: Trade $50, Earn $75!
TXPREDICTSNew users only. T&Cs apply. ProphetX's minimum age is 18 (or the local age of majority if higher); we recommend 21+. Not available in Nevada. Trading involves risk.
Last checked November 2, 2026
What's taxable
- Realised profit. Gains on settled or sold contracts, netted against losses for the year.
- Promotional credit. The $75 welcome bonus may count as income once it becomes withdrawable; ask your tax professional how to treat it.
- Not taxable: an unrealised position sitting in your portfolio at year end that you haven't closed.
Documentation
ProphetX doesn't publish a list of the tax forms it issues for event-contract trading, so check the app for year-end statements and don't rely on receiving a form. Export your own trade history at least quarterly; your profits are reportable either way.
(opens in a new tab)Records worth keeping
- Date, market, side, size, entry price and settlement for every position
- Deposits and withdrawals with dates and amounts
- Any bonus credit and when it converted to withdrawable funds
How it compares
Kalshi and OG by Crypto.com also settle in dollars, and the same open classification question applies to all of them — Kalshi taxes. Polymarket US also trades in dollars; see Polymarket taxes.
This is general information, not tax advice. Talk to a CPA about your own position.
Trade $50, get $75
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TXPREDICTS
New users only. T&Cs apply. ProphetX's minimum age is 18 (or the local age of majority if higher); we recommend 21+. Not available in Nevada. Trading involves risk.
Open ProphetX (opens in a new tab)
New users only. T&Cs apply. ProphetX's minimum age is 18 (or the local age of majority if higher); we recommend 21+. Not available in Nevada. Trading involves risk.
Sources & references
Frequently asked questions
Do I pay Texas state tax on ProphetX profits?
No. Texas has no personal income tax, so trading profits are only taxable at the federal level.
Does ProphetX issue a 1099?
ProphetX doesn't publish which tax forms it issues for event-contract trading, so don't count on one. Check the app for year-end statements and keep your own trade log; profits are reportable either way.
How are event contract profits taxed federally?
They're taxable, but the IRS hasn't issued guidance on how event contracts are classified. Professionals argue for gambling income, ordinary income or capital gains, or Section 1256; from 2026, gambling losses are deductible only up to 90% of losses. General information, not tax advice. Speak to a tax professional.
Is the $75 welcome bonus taxable?
Promotional credits may count as income once they become withdrawable. Track the credit and any profit it generates, and ask a tax professional how to treat it.
What records should I keep?
Export your ProphetX trade history at least quarterly: date, market, side, size, price and settlement. That log is what makes a federal return straightforward.
Already have ProphetX? Add a second app
- OG: Trade $25 Get $50 in Rewards! (New users only) (code
TXPREDICTS) · 42 states + D.C. Claim on OG (opens in a new tab)
Paid partnership with OG. Terms and conditions apply. Trading derivatives involves risk and may not be appropriate for all. Availability subject to jurisdictional limitations. For more information, visit: OG.com. - Polymarket US: Deposit $10 get a $25 Trading Bonus! (code
TXPREDICTS) · 48 states + D.C. Claim on Polymarket US (opens in a new tab)
18+ Only. Restrictions and eligibility requirements apply. Not available in all jurisdictions. Trading is risky. 100% loss can occur. See polymarket.com/tos for more information. The Polymarket US App serves as an independent software provider and affiliate of Polymarket US and Polymarket Clearing, the CFTC-regulated exchange and clearing organization.
21+ · T&Cs apply · Terms
New users only. T&Cs apply. ProphetX's minimum age is 18 (or the local age of majority if higher); we recommend 21+. Not available in Nevada. Trading involves risk.
