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Taxes by stateLetters, then lawsuits

Missouri gambling winnings tax and Kalshi legal status

Missouri taxes gambling winnings and prediction market profits as income (0% to 4.7%). Gambling losses only reduce your state tax if you itemize, and only up to your winnings.

As of November 3, 2026, we found no court order that stops or protects trading in Missouri. Where it stands

Checked November 3, 2026 against Missouri’s tax department, court dockets and regulator records.

Missouri at a glance

Income tax
0% to 4.7%
Gambling losses
Only if you itemize
2026 federal 90% rule
Not stated yet
Prediction markets
Letters, then lawsuits

Income tax

How does Missouri tax gambling and prediction market winnings?

For 2025, Missouri taxes the first $1,313 of income at 0%, then 2% to 4.5% in steps, and 4.7% on income over $9,191.

For tax years beginning on or after January 1, 2025, Missouri allows a 100% subtraction of income reported as a capital gain for federal purposes (RSMo 143.121), claimed on Form MO-A. It covers capital gains only, not ordinary income, and capital losses don't qualify. The statute doesn't separate short-term from long-term gains.

Gambling losses

Can you deduct gambling losses in Missouri?

Missouri allows gambling losses only if you itemize. Missouri itemized deductions start from the federal itemized total (Form 1040, line 12e), less state income taxes, so a federal gambling loss deduction carries over. There is no separate gambling line.

  • Itemizing on Missouri follows the federal choice. If you itemized federally, you may itemize in Missouri or take the standard deduction. If you were required to itemize federally, you must itemize in Missouri.
  • Missouri copies the federal itemized total, but the state hasn't said how it treats the 2026 limit.

Timeline · 4 steps

Every step in Missouri, in order

4 steps since Sep 17, 2026, oldest first. Each links the filing, order or page it comes from.

  1. Sep 17, 2026

    Attorney general · Missouri Attorney General

    Attorney General Catherine Hanaway announced cease-and-desist letters to six companies, saying sports event contracts are unlicensed sports wagering that needs a Missouri Gaming Commission license and age checks for under 21. A letter demands compliance and threatens enforcement; it is not a court order.

    Missouri AG press release

  2. Oct 16, 2026

    Court · U.S. District Court, Western District of Missouri · North American Derivatives Exchange, Inc. v. Hanaway (No. 4:26-cv-00969)

    Crypto.com's exchange, doing business as OG.Com Prediction Markets, sued for declaratory and injunctive relief against the attorney general and Missouri gaming officials. As of October 21 the docket shows only appearances, summonses and a standing order.

    CourtListener docket, N.A. Derivatives Exchange v. Hanaway

  3. Oct 16, 2026

    Court · U.S. District Court, Eastern District of Missouri · Ludlow Exchange, LLC v. Hanaway (No. 4:26-cv-01780)

    Ludlow Exchange and Novig sued the attorney general and two other Missouri officials in St. Louis federal court. No ruling has been made.

    CourtListener docket, Ludlow Exchange v. Hanaway

  4. Oct 27, 2026

    Court · U.S. District Court, E.D. Missouri · KalshiEX LLC v. Hanaway (No. 4:26-cv-01860)

    Kalshi sued the Missouri attorney general and gaming commission in federal court, saying federal law keeps the state from regulating its contracts.

    Complaint, KalshiEX v. Hanaway, Oct. 27, 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 November 3. New Jersey's petition to the Supreme Court, Flaherty v. KalshiEX (No. 26-299), is waiting on Kalshi's response due December 7, 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.

  1. 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, 2026

  2. Aug 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, 2026

  3. Sep 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 December 7, 2026 after two extensions. 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. 26-299

  4. Sep 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, 2026

  5. Sep 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, 2026

  6. Oct 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, 2026

  7. Oct 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 Missouri

The IRS hasn’t said how prediction market trades are taxed, so you pick one of four federal methods: capital gains, ordinary income, gambling or Section 1256. Missouri starts from your federal figures, so the method you choose federally generally carries onto your state return. If you report as gambling, the loss rules above apply. The four methods, compared.

The court cases are about whether Missouri can license or stop the platforms. None of them decides how your trades are taxed. Trades you already made, including positions an order made you close, still count in your tax year.

Ask your AI

Ask your AI about your taxes in Missouri

Answer a few questions and we write the prompt for ChatGPT, Claude, Perplexity or any AI. It carries the four tax methods, your state’s rule and links to the pages behind them, checked November 3, 2026. Or run your actual trades for exact figures, free.

Tax year
Up or down this year?
Open positions on December 31?
Add rough numbers (optional)

The AI can then work the methods out for your year. Round figures are enough.

Your prompt

2,409 characters

I trade prediction markets on Kalshi. I'm working on my US federal taxes for 2026. I live in Missouri.

From WagerMints, checked November 3, 2026:
- Kalshi's Documents page says it does not report profits and losses to the IRS.
- Forms it may send: 1099-INT for interest, 1099-MISC for credits and rewards, 1099-B or 1099-DA for crypto transfers.
- Its Profit and Loss statement uses first in, first out, is split by year and updates on the first morning of each month.
- Reward credits only appear in the activity export, not the trades export.
- The IRS has published no guidance on how event contracts are taxed.

Four ways traders report this:
1. Capital gains: Form 8949 and Schedule D, short- or long-term by holding period. Net losses offset up to $3,000 of other income a year, and the rest carries forward.
2. Section 1256: Form 6781, 60% long-term and 40% short-term however long I held. Positions open on December 31 count as sold at that day's value. Disputed: Camuso and Mukherjee (Tax Notes Federal, June 2026) conclude it isn't available, White & Case argues for it, and the CFTC's October 2026 proposal to call event contracts swaps cuts against it, because Section 1256 excludes swaps.
3. Ordinary income: net result on Schedule 1, line 8z.
4. Gambling: winnings on Schedule 1, line 8b. Losses only on Schedule A if I itemize, only up to winnings, and only 90% of them from 2026.

Missouri: Missouri taxes gambling winnings and prediction market profits as income (0% to 4.7%). Gambling losses only reduce your state tax if you itemize, and only up to your winnings.
Legal status there: As of November 3, 2026, we found no court order that stops or protects trading in Missouri.

Read these pages:
- https://wagermints.com/kalshi-taxes
- https://wagermints.com/blog/how-kalshi-calculates-profit-and-loss
- https://wagermints.com/blog/how-to-report-kalshi-polymarket-taxes
- https://wagermints.com/state-taxes/missouri

My question: How would my year come out under each of the four methods?

How to answer:
- Say which links you opened, and never describe one you didn't open. If one fails, use the facts above and say so.
- Mark each point [linked source], [general tax rule] or [unsettled].
- Put the methods side by side in one table for my year, and state any number you assume.
- Don't pick a method for me. End with questions for a CPA or enrolled agent, then anything you need from me.
Open in ChatGPTOpen in ClaudeOpen in Perplexity

WagerMints doesn’t see or store what you type here. The prompt goes to the AI you pick, under that company’s terms. Never add your Social Security number, API keys or wallet keys. AI answers can be wrong, so check them against the linked sources and a preparer.

Questions

Questions about Missouri

Does Missouri tax gambling winnings?
Missouri taxes gambling winnings and prediction market profits as income (0% to 4.7%). Gambling losses only reduce your state tax if you itemize, and only up to your winnings.
Can I deduct gambling losses in Missouri?
Missouri allows gambling losses only if you itemize. Missouri itemized deductions start from the federal itemized total (Form 1040, line 12e), less state income taxes, so a federal gambling loss deduction carries over. There is no separate gambling line.
Is Kalshi legal in Missouri?
As of November 3, 2026, we found no court order that stops or protects trading in Missouri. The attorney general sent cease-and-desist letters to six platforms on September 17, 2026, saying sports event contracts are unlicensed sports betting. Crypto.com and Novig sued in federal court on October 16, 2026, and Kalshi sued in federal court in St. Louis on October 27, 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: Montana, Nebraska, New Mexico, New York, North Carolina, North Dakota. All states.

Tax facts checked against Missouri’s own tax pages on October 26, 2026; legal status on November 3, 2026. Rules and cases change, so confirm with current instructions before you file.

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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 Missouri is taxing before you file. Free, no account.

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