Settlement
When a prediction market resolves and pays out. YES pays $1 if event occurs, $0 if not.
Settlement is when a prediction market officially resolves — the event either happened or didn't — and contracts are paid out. This is the most common way prediction market positions close.
How settlement works
- The event occurs → YES shares pay $1.00, NO shares pay $0.00
- The event doesn't occur → NO shares pay $1.00, YES shares pay $0.00
- Payment is automatic — you don't need to take any action
Settlement = taxable event
The moment a market settles, you have a taxable disposition. Your gain or loss is locked in:
Settlement timing
Different platforms settle at different speeds:
- Kalshi: Usually settles within minutes to hours of the event
- Polymarket: Settlement can take hours to days depending on the resolution source
- DraftKings: Typically settles same day
Settlement date matters for tax year
If you buy shares in December 2024 but the market settles in January 2025, the gain/loss goes on your 2025 return. The settlement date — not the purchase date — determines the tax year.
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