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.
What's taxable
- Realised profit. Gains on settled or sold contracts, netted against losses for the year.
- Promotional credit. The $20 welcome bonus is generally income once it becomes withdrawable.
- Not taxable: an unrealised position sitting in your portfolio at year end that you haven't closed.
Documentation
As a federally regulated venue settling in dollars, ProphetX reports in line with US derivatives rules, so expect year-end documentation on a funded account. Don't rely on it alone — export your own trade history at least quarterly.
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 issue documentation, so the treatment is similar — Kalshi taxes. Polymarket settles in USDC and doesn't issue a 1099, so you self-report: Polymarket taxes.
This is general information, not tax advice. Talk to a CPA about your own position.
Subject to regulatory approval. Limited time offer. T&Cs Apply. 18+ only. Restrictions and eligibility requirements apply. ProphetX is a CFTC-regulated sports prediction market, not a sportsbook. Event contract trading involves significant risk and is not appropriate for everyone. 100% loss can occur. Not available in all jurisdictions.