Prediction Market Betting Hype and Self-Employment Taxes You Don’t Want to Miss

Feb 5, 2026

Anna Helhoski, senior news writer covering personal finance and consumer issues, joins to discuss the rise of app-based sports betting and prediction markets. She explains how post-2018 legalization, in-game wagers, prop bets and nonstop ads changed the landscape. The conversation also covers tax basics for winnings and where to find help for gambling problems.

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INSIGHT

Prediction Markets Make Beliefs Tradable

Prediction markets turn beliefs into tradable contracts priced by crowd probability. If you buy a 'yes' contract, you profit only if the outcome occurs, similar to fractional odds trading.

ADVICE

Treat Betting As Entertainment

Treat betting as entertainment, not income, and set limits before you start. Stop if it's no longer fun and seek help if you lose control.

ANECDOTE

S‑Corp Conversion Cut Her Tax Bill

Elizabeth converted her LLC to an S corp and says it cut her tax bill roughly in half. She credits paying self-employment taxes only on a

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Learn how to plan for self-employment taxes and understand how savings interest can affect your tax bill.

How can sports betting apps affect your finances? How do you set up taxes for 1099 contract work? Hosts Sean Pyles and Elizabeth Ayoola discuss self-employment taxes to help you prepare for tax season and avoid surprises. But first, senior news writer Anna Helhoski joins them to discuss the rise of sports betting and prediction markets. They break down how legal sports betting expanded after a 2018 Supreme Court decision, how app-based betting and prop bets make it easy to wager in real time, and the growing concerns around addiction risk, regulation, and the nonstop flood of betting ads.

Then, Sean and Elizabeth dig into tax prep for contract work, including how business structure can affect self-employment taxes, ways to pay during the year through quarterly estimated payments or adjusting W-2 withholding, and how to stay organized with bookkeeping, deductible expenses, and forms like 1099-NEC. They also cover what to expect tax-wise with a Roth IRA and why high-yield savings account interest is typically taxed as ordinary income (often reported on Form 1099-INT).

Use NerdWallet’s free calculator to estimate your self-employment tax: https://www.nerdwallet.com/taxes/calculators/self-employment-tax-calculator

Want us to review your budget? Fill out this form — completely anonymously if you want — and we might feature your budget in a future segment! https://docs.google.com/forms/d/e/1FAIpQLScK53yAufsc4v5UpghhVfxtk2MoyooHzlSIRBnRxUPl3hKBig/viewform?usp=header

In their conversation, the Nerds discuss: self-employment taxes, 1099 contractor taxes, estimated taxes, quarterly estimated tax payments, Form 1099-NEC, Schedule C, Schedule SE, sole proprietor taxes, S corp vs LLC taxes, S corp reasonable salary, self-employment tax rate 15.3%, net earnings self-employment tax, W-2 withholding for side hustle, Form 1040-ES, bookkeeping for freelancers, deductible business expenses, home office deduction, business bank account, separate business and personal finances, business credit card for expenses, tax deadline for S corp, first time penalty abatement, IRS penalty abatement, Roth IRA taxes, Roth IRA income limits 2026, Roth IRA phase-out, traditional IRA tax deduction, SEP IRA, SIMPLE IRA, tax forms for freelancers, Form 1099-INT, high-yield savings account taxes, sports betting taxes, sports betting apps, DraftKings, FanDuel, prediction markets, Kalshi, and Polymarket.

To send the Nerds your money questions, call or text the Nerd hotline at 901-730-6373 or email podcast@nerdwallet.com.

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