Prediction Apps Are Pulling Contracts in Utah. What Happens to Your Taxes?

An app pulling its contracts in Utah doesn’t create a tax bill. DraftKings and FanDuel say open positions stay open and settle as normal. Each one is taxed when it settles or when you sell it. The thing to watch is the date it settles, because that sets the tax year under three of the four methods.

Which apps stopped offering contracts in Utah?

Four apps changed what they offer in Utah after the state charged Kalshi and its co-founders on October 28. Sports Betting Dime and Fox 13 quoted each company:

DraftKings says its change applies to customers physically located in Utah. Robinhood’s statement covers new positions only. None of the statements says whether Utah customers can still sell an open position before it settles. Check your app before you plan around it.

Is the exit itself taxable?

No. Federal tax counts a gain or loss when you sell or otherwise dispose of something. An app no longer listing a market isn’t a sale. Your position is the same position it was the day before.

If an app closes your positions for you at a price, that is different. A forced close is a sale on that date, and the gain or loss counts in 2026. Fanatics and Robinhood haven’t said publicly what happens to open positions.

Which tax year does a Utah position land in?

It depends on when the contract settles. A contract on this weekend’s games settles this month. A contract on next June’s NBA Finals settles in 2027.

Section 1256 is disputed for event contracts. Camuso and Mukherjee conclude it isn’t available under the current statute, and White & Case argues for it. The IRS hasn’t ruled. DraftKings, FanDuel and Robinhood route trades through CFTC-regulated exchanges, which is where the argument starts. How the December 31 mark works.

What if you can’t sell a losing position?

Then you can’t choose the year of the loss. Someone who could sell would be able to take a losing position’s loss in 2026. If you have to hold until settlement, it lands in the settlement year. Here is one made-up position, with fees left out:

• You hold 500 Yes contracts on an NBA champion, bought at $0.30, so $150.
• On December 31, 2026 they’re worth $0.10, so $50.
• Your team loses in June 2027 and they settle at $0.

The gambling row matters most. Gambling losses only count if you itemize, only against winnings from the same tax year, and from 2026 only 90% of them count. A Utah trader who won big on 2026 contracts and is stuck holding a 2027 loser can’t use that loss to cut 2026 winnings under gambling treatment. What a loss is worth under each method.

Is withdrawing your balance taxable?

No. Moving your own cash out of an app isn’t income. The tax comes from contracts that closed or settled, and it is the same whether you withdraw this week or leave the money where it is.

Do Utah residents still owe state tax?

Yes. The Utah return starts from federal adjusted gross income and taxes it at a flat 4.45% for 2026. Utah has no deduction for gambling losses. Instead it gives a 6% credit tied to your federal deductions, which phases out as income rises.

Utah’s legal fight with these platforms doesn’t change that. IRS Publication 525 says income from illegal activities must be reported, so the outcome in court doesn’t remove tax on profit you already made. Where the Utah case against Kalshi stands.

What about Kalshi in Utah?

As of November 5, 2026 we found no court order that stops Kalshi in Utah. The state charged the company and its two co-founders on October 28, and the CFTC has sued Utah to block its enforcement. Charges are allegations, not findings. The Kalshi in Utah page keeps the dated record. The tax rules on this page are the same for Kalshi contracts.

What should Utah traders do now?

• Download your trade history and statements from each app now, while you still have full access.
• List every open contract and the date it settles, so you know which year each one lands in.
• Note each open position’s price on December 31. Section 1256 needs it, and a preparer will ask.
• Keep each app’s results apart. DraftKings and FanDuel haven’t published which tax form, if any, covers these trades. Robinhood sends an annual statement, not a 1099. Your own records fill the gaps.

WagerMints shows your year under all four federal methods and lists open positions on December 31, free.

Questions about the Utah exits and your taxes

General information about US tax, not tax or legal advice.