Owen Monagan

I trade these contracts. At some point I looked at a year of my own positions and thought: what on earth do I do about taxes on this? There was no good answer. The exports are raw, the treatment is unfamiliar, and the advice that exists was written for people trading something else.

Then I asked around, and it turned out not to be my problem. Across hundreds of conversations with sports bettors and traders, the same gap came up every time: people were quietly losing money at tax time, and most of them assumed a loss was just a loss. Often it is worth something. That is the whole reason Realize exists.

I have spent years building consumer-finance and responsible-gaming products for sports bettors and traders, at Layup, always with the same goal: helping people who bet hold on to more of their own money. A prize-linked savings product. A product to offset the financial impact of betting. Realize is the same idea pointed at the one moment where the money is largest and least understood. I spoke on the technology track at SBC Summit Americas in 2026.

Layup’s banking partner is NBKC, a federally insured bank that also provides Acorns’ checking accounts. That earns a line here for one reason: a regulated bank runs real diligence before it puts its name beside yours, so it is a judgement made about us from outside the company.

We have publicly announced $2.3 million in funding, from investors including Chicago Ventures and Continental Investment Partners, and personally from the founders of Discover and Aeropay. I hold a B.A. Moderatorship in Computer Science and Business from Trinity College Dublin.

Over the years we have spent more than $100,000 on legal research at the intersection of consumer finance and sports betting, including formal opinions from Orrick on the prize-linked savings products we built. That was not tax law, and I am not going to pretend it was.

What sits behind the guides is more ordinary, and more useful to tell you about. I have sat in the rooms where the case for and against these markets is actually made, at gaming law and regulation conferences including the IAGA Gaming Summit and the NCLGS summer meeting, and heard both sides put by the people making them rather than summarised secondhand. Then I took the tax question to lawyers and CPAs who work in this area and asked what it means. That, plus the primary sources, read carefully and cited on the page, is the whole basis.

None of it is a tax credential and none of it makes me right. Where the treatment of these contracts is genuinely unsettled, every guide says so rather than picking the answer that sells better.

Most writing about prediction-market taxes hedges until it says nothing. Every sentence is qualified, every hard question ends at “consult a professional”, and you close the tab knowing exactly what you knew before you opened it. Hedging is not the problem. Hedging instead of doing the work is, and it usually means nobody read the statute, sat in the room where this gets argued, or worked out what a prediction-market contract actually is.

Unsettled is not the same as unknowable. There is a statute, there is case law, there is a regulatory record, and there are people who do this for a living. Read them and you can hold a view and say why you hold it.

A concrete example of what gets lost. Whether a prediction-market contract is the same thing as a sports bet, and whether either is gambling for tax purposes, are separate questions with separate answers, and the federal and state positions are currently moving apart rather than together. Plenty of CPAs collapse them. That is not carelessness: a general practice is not paid to track a niche this fast-moving, and until recently there was nothing here worth tracking. It is the reason this site exists, and the reason we hand you something to take to your accountant rather than asking you to take our word for it.

So the guides do both, and keep them apart on the page. Where something is settled, they say what the law is. Where it is not, they say so plainly, and then tell you what I actually believe and the reasoning that got me there, marked as my view rather than as the law. You are free to disagree with it, and so is your CPA. What you will not get here is a page that takes ten minutes and commits to nothing.

The Section 1256 engine and the tax spec it is written against. Every figure the product shows comes out of it, and I would rather that be one named person’s responsibility than a company’s.

The hard part is the year-end mark. Section 1256 treats every open position as though you sold it on the last business day of the year, so a filing needs the market value of each position on December 31, not only the trades you closed. That number is in nobody’s export, and an accountant cannot reconstruct it by hand. We rebuild it from the venue’s own published price history, position by position, which is also what lets somebody file a year that ended before they had heard of us. Where the venue published no price that day we say so and leave the position out, rather than inventing a mark.

That is what we hand your accountant: not a view on how you should file, but the figures underneath it and a trail back to every trade behind them.

• How to Amend a Tax Return for Kalshi Losses

  You can amend up to three prior years on Form 1040-X to claim Kalshi and Polymarket losses you never deducted. The §1256 carryback is a different, narrower move.

• Are Prediction Markets Taxed as Gambling?

  No IRS guidance says Kalshi or Polymarket contracts are wagering, and the record points the other way. What gambling treatment costs, and how Section 1256 compares.

• Arbitrage Betting Taxes: How Profits Are Taxed

  Arbitrage profits are taxable, but how depends on the facts: gambling income, a Schedule C business, or possibly Section 1256 capital, and that decides the bill.

• How to Track Prediction Market Trades for Taxes

  Keeping clean Kalshi and Polymarket records for tax season: what to track, how to pull your trade history, and the record-keeping mistakes to avoid.

• OBBBA 90% Gambling-Loss Limit Under §165(d)

  From tax year 2026 the OBBBA caps the gambling-loss deduction at 90%, so break-even bettors can owe tax on phantom income. How §165(d) now works, and who it hurts.

• What Bettors Get Wrong About Taxes

  The most common tax mistakes sports bettors and prediction-market traders make (from "no 1099 means nothing to report" to neglected records) and what to do instead.

• What Is the Section 1256 60/40 Rule?

  Section 1256 contracts get a blended 60% long-term / 40% short-term rate, mark-to-market and a loss carryback. Why it may matter to prediction-market traders.

• Are Kalshi Winnings Taxable?

  Yes. Kalshi winnings are taxable income in the US. How event-contract gains and losses are reported, why the treatment is unsettled, and what records to keep.

LinkedIn · TikTok, where I talk through what we are learning as we build.

Nothing on this site is tax advice, and I am not qualified to give it. What I can do is organize your trades, compute a position, show every step, and be honest about which parts of the law are settled and which are not. Take the output to someone who is qualified. That is what it is built for.

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