WagerMintsKalshi and prediction markets in Texas: taxes and legal status
Texas has no personal income tax, so the state doesn't tax your gambling winnings or short-term prediction market gains. You still owe federal tax.
As of October 27, 2026, we found no Texas lawsuit, order or letter that stops anyone from trading on Kalshi, Polymarket US, Robinhood, Coinbase or Crypto.com in the state. Where it stands
Checked October 27, 2026 against Texas’s tax department, court dockets and regulator records.
Texas at a glance
- Income tax
- None
- Gambling losses
- No state income tax
- 2026 federal 90% rule
- No state income tax
- Prediction markets
- Senate study, no action
Income tax
How does Texas tax gambling and prediction market winnings?
Texas has no personal income tax on wages, gambling winnings or short-term trading gains.
Texas does not tax individual capital gains, short-term or long-term.
Legal status
Is prediction market trading legal in Texas?
As of October 27, 2026, we found no Texas lawsuit, order or letter that stops anyone from trading on Kalshi, Polymarket US, Robinhood, Coinbase or Crypto.com in the state. Texas bans most gambling, and the Lieutenant Governor has told the state Senate to study prediction markets before the legislature meets in January 2027. A Senate committee hearing on the topic was set for September 15, 2026.
What happens next: Senate committee reports are expected before the legislature convenes in January 2027.
Timeline · 2 steps
Every step in Texas, in order
Mar 27, 2026
Governor · Texas Lieutenant Governor
Lt. Gov. Dan Patrick told the Senate State Affairs Committee to study prediction market gambling under the charge 'Closing Gambling Loopholes' and recommend ways to protect Texas elections and sports. This is a study order, not a rule against trading.
2026 Interim Legislative Charges (Lt. Gov.)Sep 15, 2026
Legislature · Texas Senate Committee on State Affairs
The committee posted a public hearing notice for 9:00 a.m. on September 15, 2026 to take testimony on the prediction market charge. A hearing is not a law and does not change what traders can do.
Senate notice of public hearing, State Affairs, Sept. 15, 2026
Federal courts
What the federal courts and the CFTC have said
States say prediction market sports contracts are bets that their gambling laws cover, while Kalshi and the CFTC say they are swaps, a kind of derivative that only the federal Commodity Exchange Act and the CFTC regulate. The Third Circuit appeals court sided with Kalshi against New Jersey in April 2026, while the Ninth Circuit (Nevada, August 2026) and the Sixth Circuit (Ohio and Tennessee, September 2026) ruled for the states, all at the preliminary stage. The Fourth Circuit (Maryland) heard argument in May 2026 and had not ruled as of October 27. New Jersey's petition to the Supreme Court, Flaherty v. KalshiEX (No. 26-299), is waiting on Kalshi's response due November 9, 2026, and the Court has not yet said whether it will hear the case. On October 9, 2026 the CFTC proposed a rule defining event contracts as swaps.
Apr 6, 2026
Court · U.S. Court of Appeals for the Third Circuit · KalshiEX LLC v. Flaherty (No. 25-1922)
By a 2-1 vote, the appeals court for New Jersey, Pennsylvania and Delaware upheld an order that stops New Jersey from enforcing its gambling laws against Kalshi's sports contracts for now. It found Kalshi likely to win its argument that federal law overrides the state. This is a preliminary ruling, not a final judgment.
Third Circuit opinion, Apr. 6, 2026Aug 28, 2026
Court · U.S. Court of Appeals for the Ninth Circuit · KalshiEX LLC v. Assad (No. 25-7516)
A unanimous three-judge panel upheld the order that lifted Kalshi's protection against Nevada, so Nevada may enforce its gambling laws against Kalshi's sports contracts. The court held that sports contracts are not swaps under federal law. It sent Kalshi's election contracts back to the district court. This is a preliminary ruling.
Ninth Circuit opinion, Aug. 28, 2026Sep 2, 2026
Court · Supreme Court of the United States · Flaherty v. KalshiEX, LLC (No. 26-299)
New Jersey asked the Supreme Court to review the Third Circuit ruling. Kalshi's response is due November 9, 2026 after an extension. Many states, tribes, the NFL and others have filed friend-of-the-court briefs. The Court has not decided whether to take the case.
Supreme Court docket No. 26-299Sep 16, 2026
Court · U.S. Court of Appeals for the Ninth Circuit · Blue Lake Rancheria v. Kalshi, Inc. (No. 25-7504)
In a case brought by two California tribes, the court held the tribes are likely to win their claim that Kalshi's sports contracts offered on tribal lands break the federal Indian Gaming Regulatory Act, and sent the case back to the lower court. A Lanham Act (false advertising) claim was rejected.
Ninth Circuit opinion, Sept. 16, 2026Sep 25, 2026
Court · U.S. Court of Appeals for the Sixth Circuit · KalshiEX LLC v. Schuler (Ohio) and KalshiEX LLC v. Orgel (Tennessee) (Nos. 26-3196 and 26-5235)
A unanimous panel upheld a federal judge's refusal to block Ohio's gambling laws and threw out the order that had protected Kalshi in Tennessee. It held Kalshi's sports contracts are not swaps and, even if they were, federal law does not override the states' gambling laws. The cases go back to the lower courts.
Sixth Circuit opinion, Sept. 25, 2026Oct 9, 2026
Regulator · Commodity Futures Trading Commission
The CFTC proposed a rule that would expressly define event contracts, including those on sports, politics, culture and weather, as swaps, which would place them under federal rather than state oversight. The public may comment for 30 days after Federal Register publication (91 FR 66022). It is a proposal, not a final rule. The same day the CFTC issued an interim rule excluding casino-style gambling products, such as sportsbook wagers and casino games, from the swap definition (91 FR 65969).
CFTC press release 9310-26, Oct. 9, 2026Oct 26, 2026
Court · U.S. Court of Appeals for the Fourth Circuit · KalshiEX LLC v. Martin (Maryland) (No. 25-1892)
No ruling yet. The appeal was argued May 7, 2026 and the parties were still filing supplemental authorities on Oct. 26, 2026.
CourtListener docket, Fourth Circuit No. 25-1892
Your trades
Kalshi and Polymarket profits in Texas
Texasdoesn’t tax them, but the federal rules do, and the method you choose can change your federal bill by thousands. The four methods, compared.
Questions
Questions about Texas
- Does Texas tax gambling winnings?
- Texas has no personal income tax, so the state doesn't tax your gambling winnings or short-term prediction market gains. You still owe federal tax.
- Can I deduct gambling losses in Texas?
- Texas has no personal income tax, so there is nothing to deduct them from on a state return. Federal rules still apply.
- Is Kalshi legal in Texas?
- As of October 27, 2026, we found no Texas lawsuit, order or letter that stops anyone from trading on Kalshi, Polymarket US, Robinhood, Coinbase or Crypto.com in the state. Texas bans most gambling, and the Lieutenant Governor has told the state Senate to study prediction markets before the legislature meets in January 2027. A Senate committee hearing on the topic was set for September 15, 2026.
- Does the court fight change how my trades are taxed?
- No. These cases decide whether a state can license or stop the platforms. None of them decides how your trades are taxed, and trades you already made still count in your tax year.
States with the same rule on losses: Washington, Wyoming, Alaska, Florida, Nevada, New Hampshire. All states.
Tax facts checked against Texas’s own tax pages on October 26, 2026; legal status on October 27, 2026. Rules and cases change, so confirm with current instructions before you file.
See your own year four ways
WagerMints prices your Kalshi or Polymarket year under all four federal methods, side by side, so you can see what Texas is taxing before you file. Free, no account.
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