That uncertainty matters because the same trading year can produce radically different tax outcomes depending on whether the activity is treated as:

• a §1256 contract
• a capital asset
• or gambling income

Under the gambling framework, the new OBBBA 90% loss cap means a break-even year can still produce taxable phantom income.

The reporting burden sits entirely with the trader.

Robinhood has stated explicitly that it does not issue a 1099 for event contract trades. Instead, users receive an Event Contracts Annual Statement labeled as informational only, not a substitute for a tax form. The classification choice, the gain-and-loss calculation, and the reporting form all sit on the taxpayer's side.

We are already seeing traders discover this during reconstruction work. Many assumed Robinhood Event Contracts would behave like normal brokerage activity with a clean year-end 1099-B. In practice, the reporting position becomes much more complicated once sports markets, NFL parlays, Kalshi routing, and the unresolved IRS classification question all converge inside the same return.

How are Robinhood Event Contracts taxed in 2026? This guide should also support accurate reporting for the IRS as the OBBBA gambling-loss cap, 1099 gaps, and prediction-market classification questions continue evolving together.

I'm Chris Herbst, Managing Director at CountDeFi, a global crypto tax reporting firm specializing in complex cryptocurrency and DeFi reconciliations. I hold the GTP (Global Tax Practitioner) designation and am a member of CIBA (Chartered Institute for Business Accountants), with a focus on cross-border crypto tax reporting and forensic transaction reconstruction. Since 2017, our team has worked with US-resident prediction-market traders, on-chain Polymarket users, Kalshi traders, Robinhood Event Contracts users, and dual-jurisdiction filers navigating unresolved reporting positions across multiple tax frameworks. In this guide, I'll walk you through the most common Robinhood Event Contracts tax questions, the recurring mistakes that trigger problems with the IRS, and the practical reporting decisions traders face before the April 15 filing deadline.

This guide is primarily for US-resident Robinhood traders using Event Contracts for sports outcomes, parlays, prop bets, Fed Funds Rate markets, or high-volume directional trading. If your activity now spans hundreds of positions per year, mixed platform usage across Robinhood and Kalshi, or the new NFL parlay rollout, the reporting complexity rises sharply.

How Does The IRS Tax Robinhood Event Contracts?

The IRS has not formally ruled on how Robinhood Event Contracts should be classified for federal tax purposes.

Today, most reporting positions fall into one of three frameworks:

• §1256 contract treatment
• ordinary capital asset treatment
• gambling income treatment

Each framework produces materially different tax outcomes.

The summary table below outlines the practical difference between them.

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Why The IRS Classification Is Still Unsettled

Robinhood Event Contracts do not sit neatly inside an established IRS category.

The unresolved question is whether these contracts behave more like:

• regulated futures contracts
• standard property dispositions
• or gambling transactions

Each framework draws from a different part of the Internal Revenue Code:

• IRC §1256 for regulated futures contracts
• IRC §1001 and §1221 for capital assets
• IRC §61 and §165(d) for gambling income

The IRS has not issued:

• a Revenue Ruling
• a Private Letter Ruling
• or formal FAQ guidance

…that directly resolves the classification question for event contracts traded through a CFTC-regulated Designated Contract Market (DCM).

That leaves the reporting burden — and the examination risk — with the taxpayer.

The 3 Reporting Frameworks

§1256 Contract Treatment (Aggressive)

Under the aggressive §1256 position, Robinhood Event Contracts are treated as regulated futures-style contracts under IRC §1256(b), producing:

• 60% long-term capital gain treatment
• 40% short-term capital gain treatment
• Form 6781 reporting
• year-end mark-to-market treatment on open positions

The argument becomes materially stronger because Robinhood routes the contracts through Kalshi, which operates as a CFTC-regulated Designated Contract Market.

But the IRS has not confirmed the treatment for event contracts specifically.

For most traders, this remains the most favorable — and the most aggressive — reporting position.

Capital Asset Treatment (Practitioner Default)

Most practitioners currently default to ordinary capital asset treatment.

Under this framework:

• each contract position becomes a property disposition under IRC §1001
• gains and losses flow through Form 8949 and Schedule D
• holding period determines short-term versus long-term treatment

This framework relies on the most established and conservative tax principles available today.

Across our prediction-market reporting work, this remains the most common filing position unless the facts strongly support a different approach.

Gambling Income Treatment (Worst Outcome)

The gambling-income framework treats event contracts as wagering transactions under IRC §165(d).

Under this approach:

• winnings become ordinary income
• losses become gambling deductions
• OBBBA loss limitations apply from January 1, 2026

The gambling argument strengthened materially after the September 2025 Nevada federal court ruling that treated sports-event contracts as gambling under state law.

The ruling does not bind the IRS federally.

But it materially changes the examination-risk profile for sports-market activity.

How The OBBBA 90% Loss Cap Changes The Math

The OBBBA gambling-loss limitation is now one of the most important variables in prediction-market reporting.

Under the gambling framework, losses can only offset 90% of winnings from tax years beginning January 1, 2026.

That means a trader with:

• USD $100,000 of winnings
• and USD $100,000 of losses

…can still recognize USD $10,000 of taxable phantom income despite finishing economically flat.

At ordinary income tax rates, this can create several thousand dollars of federal tax liability on a break-even year.

Under the capital-asset or §1256 frameworks, the OBBBA cap does not apply.

This is why the classification question matters so much.

Why Robinhood Does Not Issue A 1099

Robinhood has stated that it does not issue a Form 1099-DA for event contract activity.

Instead, users receive an Event Contracts Annual Statement summarizing:

• positions
• settlement values
• entry and exit activity
• contract identifiers

The statement is explicitly labeled as informational only.

It is not:

• a Form 1099-B
• a substitute tax form
• or a completed IRS reporting calculation

The trap many traders fall into is assuming the Annual Statement functions like a normal brokerage 1099-B.

It does not.

The classification decision, gain-and-loss calculation, and reporting methodology all remain with the taxpayer.

The Kalshi Reporting Question

Kalshi may issue a Form 1099-B depending on:

• account structure
• partnership routing
• and whether the trader also maintains a direct Kalshi relationship

In practice, we routinely see traders assume:

• Robinhood will issue the reporting
• Kalshi will issue the reporting
• or one platform will reconcile the full year automatically

Often none of those assumptions hold.

Some traders receive:

• partial reporting
• duplicate reporting
• or no reporting at all

This is where prediction-market tax reporting begins behaving more like crypto reconstruction than traditional brokerage accounting.

What Are Robinhood Event Contracts?

Robinhood Event Contracts are binary “yes/no” contracts tied to real-world outcomes including:

• sports games
• prop bets
• Federal Reserve rate decisions
• economic indicators
• and political or macroeconomic outcomes

The Robinhood Prediction Markets Hub launched on March 17, 2025 using Kalshi's regulated DCM infrastructure.

Robinhood acts as the front-end broker while Kalshi clears the contracts underneath.

For tax purposes, three things matter most:

• Kalshi routing
• sports-market classification risk
• and the rapid expansion of event-contract products through 2025

Why The Kalshi Infrastructure Matters

Kalshi operates as a CFTC-regulated Designated Contract Market.

That matters because IRC §1256 references regulated exchange-traded contracts directly.

This is one reason macro-market event contracts — such as Federal Funds Rate markets — often sit closer to the §1256 argument than sports-event contracts do.

Across our prediction-market reporting work, we generally see:

• macro-market contracts lean more toward the §1256 analysis
• sports-event contracts lean more toward gambling characterization
• capital-asset treatment emerge as the practitioner middle ground

Sports Markets And Gambling Risk

Sports-event contracts now carry materially higher gambling-characterization risk after the September 2025 Nevada federal ruling.

Robinhood also:

• pulled Super Bowl contracts earlier in 2025
• faced state-level pushback
• and restricted sports markets in several jurisdictions

The state-level rulings do not control federal IRS treatment.

But they absolutely affect:

• examination risk
• reporting defensibility
• and the IRS’s likely position on sports-market contracts specifically

How Other Robinhood Activity Is Taxed

Most Robinhood products still follow standard broker-reporting frameworks.

Robinhood Crypto

Robinhood Crypto activity reports under Form 1099-DA from 2025 onward.

For 2025:

• gross proceeds reporting applies
• cost basis reporting remains limited

Transferred-in basis problems remain one of the largest reporting traps for Robinhood Crypto users.

Robinhood Stocks And Options

Stocks and options continue reporting through standard Form 1099-B workflows including:

• proceeds
• basis
• and wash-sale adjustments

For most users, this remains the cleanest part of the Robinhood reporting picture.

Robinhood ETH And SOL Staking

Robinhood ETH and SOL staking rewards are generally taxed as ordinary income at FMV on receipt under Revenue Ruling 2023-14.

Robinhood may issue Form 1099-MISC for staking rewards above USD $600.

The framework broadly matches standard IRS staking treatment.

How Are Robinhood Event Contracts Treated Internationally?

Robinhood Event Contracts are currently unavailable to retail residents in:

• Australia
• Canada
• the UK
• and Germany

The cross-border issue therefore mainly affects:

• US persons resident abroad
• dual filers
• and US taxpayers using Robinhood while living internationally

Australia

Australia generally treats casual gambling winnings as non-taxable windfalls. But subsequent disposal of any acquired assets can still trigger CGT consequences.

Canada

Canada applies a source-of-income framework. Casual activity may remain non-taxable, while commercial-scale activity may become fully taxable business income.

United Kingdom

HMRC generally does not treat gambling as trading income. But crypto-funded accounts still trigger CGT consequences on the underlying crypto disposal.

Germany

Germany generally treats prediction-market winnings under §22 Nr. 3 EStG as miscellaneous income, subject to the €256 annual Freigrenze threshold.

Do You Need A Robinhood Event Contracts Tax Specialist?

Light activity across a small number of macro-market positions can often be filed cleanly without specialist support.

The complexity rises materially once activity includes:

• sports-event markets
• NFL parlays
• mixed Robinhood and Kalshi usage
• high trade counts
• cross-border filings
• or unresolved prior-year reporting

The honest question is not:

“Does the spreadsheet total look reasonable?”

The real question is:

“Would the classification hold up under examination?”

We are already seeing prediction-market traders discover that event contracts sit in a grey area between brokerage reporting, derivatives reporting, and gambling-income treatment. The rules themselves are only part of the challenge. The reconstruction workload and classification consistency often become the larger problem.

CountDeFi Is Your Robinhood Event Contracts Tax Solution

CountDeFi helps high-complexity prediction-market traders evaluate classification risk, reconstruct basis activity across Robinhood and Kalshi, and build defensible reporting positions before filing.

We routinely model:

• §1256 treatment
• capital-asset treatment
• and gambling-income treatment

…side-by-side so traders can understand the real-world tax impact before choosing a filing position.

CountDeFi reconstructs prediction-market activity into audit-ready reporting outputs including:

• Form 6781
• Form 8949
• Schedule D
• Schedule 1
• and cross-border reporting support where applicable.

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