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Taxes by stateBeing fought in court

Ohio gambling winnings tax and Kalshi legal status

Ohio taxes gambling winnings and prediction market profits as income (2.75% flat above $26,050). It doesn't let you deduct gambling losses, so gambling winnings are taxed in full on your state return.

As of October 27, 2026, Kalshi and other platforms have not been stopped by a court order in Ohio, and no ruling protects them either. Where it stands

Checked October 27, 2026 against Ohio’s tax department, court dockets and regulator records.

Ohio at a glance

Income tax
2.75% flat above $26,050
Gambling losses
No
2026 federal 90% rule
No state income tax
Prediction markets
Being fought in court

Income tax

How does Ohio tax gambling and prediction market winnings?

For 2026, Ohio taxes nonbusiness income at 0% on the first $26,050 and 2.75% above that. For 2025, the rate was 2.75% from $26,050 to $100,000 and 3.125% above $100,000.

Ohio cities charge their own municipal income tax. Some school districts also charge a school district income tax.

Capital gains come in through federal AGI (Schedule D). Ohio has no separate short-term rule, so short-term gains are taxed at the same rates as other nonbusiness income.

Gambling losses

Can you deduct gambling losses in Ohio?

Ohio doesn't allow a deduction for gambling losses. Ohio starts from federal AGI, and the 2025 Ohio Schedule of Adjustments has no line for gambling losses. Ohio taxes the full winnings.

  • Ohio residents report all winnings through federal AGI. Nonresidents add winnings paid by the Ohio lottery, paid by an Ohio casino, or paid for sports gaming conducted in Ohio.
  • Ohio has no itemized deductions. It starts from federal AGI and allows only the adjustments listed on the Ohio Schedule of Adjustments.
  • Not applicable. Ohio has no deduction for gambling losses, so the federal 90% limit does not change the Ohio return.

Timeline · 6 steps

Every step in Ohio, in order

6 steps since Oct 7, 2025, oldest first. Each links the filing, order or page it comes from.

  1. Oct 7, 2025

    Court · U.S. District Court, S.D. Ohio · KalshiEX LLC v. Schuler (No. 2:25-cv-01165)

    Kalshi sued the Ohio Casino Control Commission and its officials in federal court in Columbus, asking the judge to stop Ohio from enforcing its gambling laws against Kalshi's sports contracts.

    CourtListener docket, KalshiEX v. Schuler

  2. Mar 9, 2026

    Court · U.S. District Court, S.D. Ohio · KalshiEX LLC v. Schuler (No. 2:25-cv-01165)

    A federal judge in Columbus denied Kalshi's request for a preliminary injunction. This was not a final ruling, but Ohio was left free to enforce its laws.

    CourtListener docket, entry of Mar. 9, 2026

  3. Sep 8, 2026

    Court · U.S. District Court, N.D. Ohio · Underdog Exchange DCM, Inc. v. Wilson (No. 1:26-cv-02169)

    Underdog's exchange and a related company sued Ohio officials in federal court in Cleveland, seeking to block enforcement against its sports event contracts.

    CourtListener docket, Underdog Exchange DCM v. Wilson

  4. Sep 25, 2026

    Court · U.S. Court of Appeals for the Sixth Circuit · KalshiEX LLC v. Schuler (decided with KalshiEX LLC v. Orgel) (Nos. 26-3196 and 26-5235)

    The Sixth Circuit appeals court affirmed the denial of Kalshi's injunction in Ohio. It held Kalshi had not shown its sports contracts are 'swaps' under federal law and, even if they were, federal law does not override Ohio's gambling laws. This ruling was about a preliminary injunction, not a final judgment.

    Sixth Circuit opinion, Sept. 25, 2026

  5. Oct 9, 2026

    Court · U.S. Court of Appeals for the Sixth Circuit · KalshiEX LLC v. Schuler (No. 26-3196)

    Kalshi petitioned for the full Sixth Circuit to rehear the case. The CFTC filed a friend-of-the-court brief on Oct. 16, 2026.

    CourtListener docket, Sixth Circuit No. 26-3196

  6. Oct 16, 2026

    Court · U.S. District Court, S.D. Ohio · QCX LLC v. Wilson (No. 2:26-cv-01502)

    QCX LLC, which runs Polymarket US, sued Ohio officials in federal court in Columbus. On the same day Underdog filed a motion for a preliminary injunction in its Cleveland case.

    CourtListener docket, QCX LLC v. Wilson

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 Ohio

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. Ohio 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 Ohio 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 Ohio

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

2,465 characters

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

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.

Ohio: Ohio taxes gambling winnings and prediction market profits as income (2.75% flat above $26,050). It doesn't let you deduct gambling losses, so gambling winnings are taxed in full on your state return.
Legal status there: As of October 27, 2026, Kalshi and other platforms have not been stopped by a court order in Ohio, and no ruling protects them either.

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/ohio

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 Ohio

Does Ohio tax gambling winnings?
Ohio taxes gambling winnings and prediction market profits as income (2.75% flat above $26,050). It doesn't let you deduct gambling losses, so gambling winnings are taxed in full on your state return.
Can I deduct gambling losses in Ohio?
Ohio doesn't allow a deduction for gambling losses. Ohio starts from federal AGI, and the 2025 Ohio Schedule of Adjustments has no line for gambling losses. Ohio taxes the full winnings.
Is Kalshi legal in Ohio?
As of October 27, 2026, Kalshi and other platforms have not been stopped by a court order in Ohio, and no ruling protects them either. On September 25, 2026 the Sixth Circuit appeals court upheld a federal judge's refusal to block Ohio from enforcing its gambling laws against Kalshi's sports contracts. Kalshi has asked the full Sixth Circuit to rehear the case, and Polymarket US and Underdog have filed their own suits against Ohio in October.
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: Rhode Island, Vermont, Wisconsin, Connecticut, Illinois, Indiana. All states.

Tax facts checked against Ohio’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.

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

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