Prediction Markets in California

California permits CFTC-regulated prediction markets. All major platforms are available, though the state has signaled interest in additional consumer protection regulations.

Prediction markets regulated by the CFTC (Commodity Futures Trading Commission) are generally permitted under federal law across all US states. However, individual states may impose additional restrictions that affect platform availability.

California taxes capital gains as ordinary income at rates up to 13.3%, the highest in the nation. Prediction market profits face significant state tax liability.

At the federal level, prediction market profits are generally reported as capital gains on IRS Form 8949 and Schedule D. The IRS treats prediction market contracts similarly to other financial derivatives. Consult a qualified tax professional for personalized advice.