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Utah gambling winnings tax and Kalshi legal status

Utah taxes gambling winnings and prediction market profits as income (4.45% flat). It allows gambling losses only in limited cases.

As of November 3, 2026, we found no court order that stops Kalshi in Utah, but the state is pressing it on three fronts. Where it stands

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

Utah at a glance

Income tax
4.45% flat
Gambling losses
Limited
2026 federal 90% rule
Follows it
Prediction markets
Kalshi criminally charged

Income tax

How does Utah tax gambling and prediction market winnings?

Utah taxes income at a flat 4.45% for 2026 (S.B. 60, retroactive to January 1, 2026). The rate was 4.5% for 2025.

Short-term gains are taxed like other income because the Utah return starts from federal AGI.

Gambling losses

Can you deduct gambling losses in Utah?

Utah has no deduction for gambling losses. Its taxpayer tax credit is 6% of your federal standard or itemized deduction plus personal exemptions, so gambling losses you itemize on your federal return raise the credit. The credit shrinks by 1.3% of your income above a base amount ($18,213 for a single filer).

  • Gambling winnings are taxed at the flat rate. The Utah return (Form TC-40) starts from federal AGI, which includes winnings.
  • Utah uses the deduction from your federal return (Form 1040, line 12e). There is no separate Utah choice to itemize.
  • Because the credit uses your federal deduction figure, the federal rule that only 90% of gambling losses count from 2026 carries through to Utah.

Timeline · 6 steps

Every step in Utah, in order

6 steps since Feb 23, 2026, oldest first. Each links the filing, order or page it comes from.

  1. Feb 23, 2026

    Court · U.S. District Court for the District of Utah · KalshiEx LLC v. Cox (No. 2:26-cv-00151)

    Kalshi sued Governor Spencer Cox and other officials in federal court, asking for a ruling that Utah cannot enforce its gambling laws against its sports contracts.

    CourtListener docket, KalshiEx LLC v. Cox

  2. Aug 4, 2026

    Court · U.S. District Court for the District of Utah · KalshiEx LLC v. Cox (No. 2:26-cv-00151)

    A federal judge in Salt Lake City granted the state summary judgment, ruling the Commodity Exchange Act does not preempt Utah's enforcement of its gambling laws against Kalshi, and closed the case. Kalshi appealed to the Tenth Circuit (No. 26-4100).

    District court memorandum decision, Aug. 4, 2026 (Doc. 65)

  3. Sep 8, 2026

    Court · U.S. Court of Appeals for the Tenth Circuit · KalshiEX LLC v. Cox (No. 26-4100)

    The appeals court denied Kalshi's emergency request for an injunction while its appeal runs. The trial judge noted this on October 14, 2026.

    District court order noting the denial, Oct. 14, 2026

  4. Oct 2026

    Attorney general · Utah Attorney General

    Utah filed civil enforcement suits in state court against prediction market operators and other businesses, saying they run illegal gambling in Utah.

    CFTC press release 9315-26 (describes Utah's state-court suits), Oct. 27, 2026

  5. Oct 27, 2026

    Regulator · Commodity Futures Trading Commission

    The CFTC sued Utah in federal court to block the state's efforts to shut down CFTC-registered exchanges using state law.

    CFTC press release 9315-26, Oct. 27, 2026

  6. Oct 28, 2026

    Attorney general · Utah Attorney General

    Prosecutors charged Kalshi and its co-founders Tarek Mansour and Luana Lopes Lara with a second-degree felony count of pattern of unlawful activity, 12 third-degree felony counts of online gambling promotion and one misdemeanor count. Charges are allegations, not a finding of guilt.

    Fox 13 report with the charging document

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 Utah

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. Utah 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 Utah 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 Utah

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

2,382 characters

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

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.

Utah: Utah taxes gambling winnings and prediction market profits as income (4.45% flat). It allows gambling losses only in limited cases.
Legal status there: As of November 3, 2026, we found no court order that stops Kalshi in Utah, but the state is pressing it on three fronts.

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/utah

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 Utah

Does Utah tax gambling winnings?
Utah taxes gambling winnings and prediction market profits as income (4.45% flat). It allows gambling losses only in limited cases.
Can I deduct gambling losses in Utah?
Utah has no deduction for gambling losses. Its taxpayer tax credit is 6% of your federal standard or itemized deduction plus personal exemptions, so gambling losses you itemize on your federal return raise the credit. The credit shrinks by 1.3% of your income above a base amount ($18,213 for a single filer).
Is Kalshi legal in Utah?
As of November 3, 2026, we found no court order that stops Kalshi in Utah, but the state is pressing it on three fronts. A federal judge ruled on August 4, 2026 that federal law doesn't stop Utah from enforcing its gambling laws against Kalshi, and Kalshi is appealing. In October Utah filed civil suits in state court, and on October 28 prosecutors charged Kalshi and its two co-founders with gambling crimes; charges are allegations, not findings. The CFTC sued Utah on October 27 to block the state's enforcement, and news reports say it asked the court on October 29 to stop Utah's civil and criminal cases.
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: West Virginia, Massachusetts, Mississippi, Oklahoma, Pennsylvania. All states.

Tax facts checked against Utah’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 Utah is taxing before you file. Free, no account.

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