A change to US tax rules included in US President Donald Trump’s One Big Beautiful Bill Act could shift speculative activity toward blockchain-based prediction markets, according to Coinbase Institutional’s Crypto Market Outlook 2026.
“Starting in 2026, a provision of the One Big Beautiful Bill… will limit the deduction for gambling losses against winnings,” David Duong, head of institutional research at Coinbase, wrote in the report released Friday.
The tax change has broad implications for gamblers, including those active in sports betting, poker or trading markets with similar risk profiles, as it will tax gamblers on winnings from which they did not actually profit.
“Consequently, prediction markets, which use financial contracts similar to derivatives, could emerge as a more tax-advantageous 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 regime.
Beyond the tax implications, Coinbase sees prediction markets emerging as a key pillar of the on-chain economy as nominal trading volume surges sharply in 2025. The firm predicts these markets could evolve into essential infrastructure for cryptocurrencies, offering real-time forecasting tools that rival traditional financial surveys and indicators.
Still, Coinbase notes that the sector remains fragmented, with many protocols operating independently and lacking shared standards. The report anticipates the rise of prediction market aggregators (interfaces that consolidate probabilities and liquidity across platforms) as the next step in the maturation of the sector. While regulatory uncertainty remains, Coinbase suggests that demand for decentralized, censorship-resistant forecasting tools will continue to grow.
