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Notes -
Wow, this is interesting. I went to double-check this, because I just recently learned that some of my old reasons for ignoring prediction markets are now invalid (US bettors are no longer capped at $850, and big questions like this are now generally liquid enough to have O($100K) open orders within a few pennies of the market price), and it turns out the current tax treatment of prediction market gains and losses is:
Uncertain!?! Tens of billions of dollars per month of trading volume, rising fast, and as of August at least it wasn't even clear to professionals what category of income to use for the results? Not a single person at the IRS could be arsed to clarify?
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