Traders assign a 90.5% implied probability against sports prediction markets facing gambling-style taxation because the IRS has issued no formal guidance classifying CFTC-regulated event contracts under the 90% loss cap of Section 165(d) as of October 2026. Platforms maintain these contracts operate as derivatives rather than wagers, enabling fuller loss netting versus traditional sportsbooks subject to the One Big Beautiful Bill Act changes. Recent state-level challenges, including New York’s lawsuit alleging unlicensed gambling operations and tax revenue erosion from shifting activity away from taxed mobile betting, have not prompted federal rulings. Ongoing CFTC oversight and the lack of revenue rulings or notices keep capital-gains or Section 1256 frameworks in play, supporting the current market consensus on no near-term reclassification.