Changes to U.S. tax rules included in U.S. President Donald Trump’s One Beauty Act could shift speculation toward blockchain-based prediction markets, according to Coinbase Agency’s 2026 Cryptocurrency Market Outlook.
“Beginning in 2026, a provision in the Big Beautiful Act… will limit the deduction of gambling losses from winnings,” David Duong, Coinbase’s director of institutional research, wrote in a report released Friday.
The tax changes have broad implications for gamblers, including those active in sports betting, poker or trading markets with similar risk profiles, as it will tax wins from which the gambler did not actually profit.
“As a result, prediction markets that utilize financial contracts similar to derivatives could become a more tax-advantaged alternative to traditional sports betting and casinos,” Duong wrote in the report. He said the structure of event-based cryptocurrency markets could provide more favorable treatment under newer tax regimes.
In addition to the tax implications, Coinbase believes that prediction markets will become a key pillar of the on-chain economy as nominal trading volumes rise significantly in 2025. The company predicts that these markets may evolve into critical infrastructure for cryptocurrencies, providing real-time predictive tools that rival traditional polls and financial indicators.
Still, Coinbase notes that the industry remains fragmented, with many protocols operating independently and lacking shared standards. The report expects the rise of prediction market aggregators—interfaces that integrate odds and liquidity across platforms—to be the next step in the industry’s maturation. While regulatory uncertainty remains, Coinbase indicates that demand for decentralized, censorship-resistant prediction tools will continue to grow.
