A change to US tax rules enshrined in US President Donald Trump’s One Big Beautiful Bill Act could shift speculative activity towards blockchain-based prediction markets, according to Coinbase Institutional’s Crypto Market Outlook 2026.
“Beginning in 2026, a provision in the One Big Beautiful Bill Act … will limit the deduction for gambling losses against winnings,” David Duong, Coinbase’s head of institutional research, wrote in the report published Friday.
The tax change has broad implications for players, including those active in sportsbooks, poker or trading markets with similar risk profiles, as it will tax players on winnings that they did not actually earn.
“As a result, prediction markets, which use financial contracts similar to derivatives, may emerge as a more tax-advantaged substitute for traditional sportsbooks and casinos,” Duong wrote in the report, suggesting that the structure of event-based crypto markets may offer more favorable treatment under the updated tax system.
In addition to the tax implications, Coinbase sees prediction markets emerging as a key pillar of the onchain economy as theoretical trading volume soared by 2025. The firm predicts these markets could evolve into essential infrastructure for crypto, offering real-time forecasting tools that rival traditional polls and financial indicators.
Still, Coinbase notes that the sector remains fragmented, with many protocols operating independently and lacking shared standards. The report foresees the emergence of prediction market aggregators – interfaces that consolidate odds and liquidity across platforms – as a next step in the maturation of the sector. While regulatory uncertainty lingers, Coinbase suggests that demand for decentralized, censorship-resistant forecasting tools will continue to grow.
