Prediction Markets May Offer Tax Advantage to Gamblers Under New 2026 Law, Coinbase Reports
In 2026, a provision in the One Big Beautiful Bill Act will limit the deduction of gambling losses against winnings. Coinbase suggests this regulatory change might steer gamblers toward blockchain-based prediction markets due to their classification as financial contracts similar to derivatives, potentially offering more favorable tax treatment.
Coinbase Institutional’s Crypto Market Outlook 2026 highlights that despite fragmentation and ongoing regulatory uncertainty, prediction markets could become key infrastructure within the crypto space. These markets might serve as tax-advantageous alternatives to traditional sportsbooks and casinos for certain gamblers.
The report notes a rising notional trading volume in prediction markets throughout 2025 and emphasizes their potential to provide real-time forecasting tools and indicators for crypto markets. The sector currently remains fragmented, but the emergence of aggregators consolidating odds and liquidity across multiple platforms is expected as part of its maturation.
Although regulatory uncertainty persists, demand for decentralized and censorship-resistant forecasting tools is projected to grow, reinforcing the potential importance of prediction markets in the evolving crypto ecosystem.
