Podcast Summary: NerdWallet's Smart Money Podcast

Episode: Prediction Market Betting Hype and Self-Employment Taxes You Don’t Want to Miss
Date: February 5, 2026
Hosts: Sean Pyles, CFP® and Elizabeth Ayoola, with guest Ana Helhoski

Episode Overview

This episode dives into two timely themes:

1. The meteoric rise of sports betting and the new world of prediction markets—the hosts discuss how betting has become mainstream, the mechanics behind it, associated risks, and evolving prediction platforms.
2. Navigating self-employment taxes—the Nerds answer a listener’s detailed question about filing status, tax setup for contractors, and tax implications of IRAs and high-yield savings.

Throughout, Sean, Elizabeth, and Ana offer actionable tips, underscore common pitfalls, and share personal anecdotes, all in the podcast’s fast-paced, supportive style.

Segment 1: Sports Betting and Prediction Market Hype

(03:10–15:33)

The Legal Boom in Sports Betting

• Background:

  • Legal sports betting exploded after the 2018 Supreme Court ruling in Murphy vs. NCAA, giving states authority to legalize, regulate, and tax sports betting. (04:36)
  • Now, over 30 states and D.C. allow some form of legal sports betting, often via mobile apps. (05:16)
  • “It’s become mainstream. More than 30 states and D.C. now allow it, including on mobile.” —Ana Helhoski (05:16)

• User Growth:

  • Ipsos report: In January 2026, 17% of Americans surveyed had placed a legal sports bet, up from 13% in 2024 and 8% in both 2022 and 2023. (04:28)

Understanding App-Based Betting

• How Apps Work:

  • Dominated by DraftKings, FanDuel, BetMGM, Caesar Sportsbook. Users can place wagers before and during events, with odds updated via algorithm to reflect bets and probabilities. (05:27)
  • “At any point these apps are handling millions of transactions at once.” —Ana Helhoski (05:52)

• Variety of Bets:

  • Money Line: Bet on who wins; straightforward odds. (06:07)

    “It’s the simplest kind of betting… just saying who wins.” —Ana (07:11)

  • Point Spread & Over/Under: Bet on victory margins or total scores. (07:18)
  • Props & Parlays: Bets on specific events (e.g. first touchdown, coin toss) or bundling multiple outcomes for higher rewards but greater risk. (08:09)

    “Props focus on really specific things happening in a game… like the color of the Gatorade the players pour on their coach’s head.” —Ana (08:09)

• Tax Implications:

  • Winnings are taxable income; only the winnings portion is taxed, not the full payout. Losses can be deducted, but only up to total winnings. (09:20)
  • “Taxes on sports betting can be really tricky and we could fill a whole episode on this...” —Ana (09:20)

The Rise of Prediction Markets

• Platforms:
  • Polymarket and Kalshi allow users to bet on nearly any real-world event (elections, weather, pop culture), not just sports. (09:52)
  • Bets are tradable contracts reflecting aggregate beliefs about outcomes—market prices imply probability.

    “Prediction markets let people make money by betting on real-world outcomes.” —Ana (09:52)

• Example:
  • “Seahawks at 68 cents” means the market estimates a 68% chance of winning; a correct contract nets $1. (10:39)
• Concerns:
  • Potential for manipulation (e.g., users betting on events they influence). (11:10–11:22)

Impact and Cultural Shifts

• Normalization:
  • Sports betting is now heavily advertised and part of mainstream sports culture. Last year, DraftKings set a Super Bowl betting record—$436 million in bets on one day. (11:58)

    “DraftKings reported ... a new record... $436 million [bet] on a single game, on a single day.” —Ana (11:59)

  • March Madness is the “Super Bowl of sports betting”—last year’s estimates: $3.1 billion in legal wagers on the college basketball tournaments. (12:28)

Risks & Addictive Potential

• Addiction and Social Concerns:
  • Apps are frictionless and gambling is “addicting” for many, risking unsustainable losses. (13:21)
  • Public concern is rising: 43% of Americans (in 2025) viewed legal sports betting as harmful (up from 34% in 2022); 40% say it’s bad for sports. (13:21, 14:21)

    “Apps are addicting. Gambling can be too. So combine the two with some highly energetic sports fans and it can become a problem.” —Ana (13:21)

• Advice for Responsible Betting:
  • Treat betting as entertainment, not as a source of income. Set clear spending limits. Stop if it’s not fun or feels out of control.

    “If you’re not having fun, stop doing it… If it’s not feeling within your control anymore, you might need to seek help.” —Ana (14:39, 15:04)

  • For help: National Council on Problem Gambling at 1-800-MY-RESET. (15:06)

Segment 2: Navigating Self-Employment Taxes

(18:00–33:45)

Listener Question

(18:00)

• Listener seeks advice on:
  1. Navigating tax status as a contractor/1099 worker
  2. Setting up taxes for self-employment
  3. Anticipating tax implications for Roth IRAs and high-yield savings

Filing Status & Self-Employment Structure

• Filing Status:

  • Five: Single, Married Filing Jointly, Married Filing Separately, Head of Household, Qualifying Surviving Spouse. (20:31)
  • “Determining your tax status is pretty straightforward, but… incorrect filing status is one of the most common mistakes.” —Elizabeth (20:17)
  • Being self-employed does not usually affect filing status.

• Business Categories:

  • Sole Proprietor, Partnership, LLC, C Corporation, S Corporation. (21:38)
  • Most contractors are sole proprietors and file via Form 1040 (personal tax return) plus Schedule C (income) and Schedule SE (self-employment tax). (22:05)

• Tip: Consult a tax professional to ensure correct filings and optimize structure.

  “It may be best to consult a tax professional before filing like I do every year.” —Elizabeth (22:05)

Self-Employment Tax Setup

• Business Structure for Tax Savings:

  • Registering as an LLC or S Corp can reduce taxes; S Corp allows you to pay self-employment tax only on a “reasonable salary,” not all profit.

  “With an S corp you only pay self employment taxes on whatever... is a reasonable salary… the rest of your profit is exempt.” —Elizabeth (23:59)

• Estimated Tax Payments:

  • Required to pay quarterly estimated taxes if you expect to owe $1,000+ for the year. (24:39)
  • Use IRS Form 1040-ES. Underpaying may mean owing and possible penalties at tax time. (25:11)

  “Estimated tax payments are... estimated. You could end up paying a little more come tax time or possibly getting a refund.” —Sean (25:11)

• DIY vs. Withholding Strategy:

  • If you have a W-2 job in addition to self-employment, increase withholding on the W-2 to cover self-employment tax.
  • Use online calculators and track diligently.

  “I save myself a lot of time by... withholding enough taxes from any W2 income...” —Elizabeth (25:35)

Tracking Income and Deductions

• Bookkeeping Best Practices:
  • Use a spreadsheet or bookkeeping software (Quicken, etc.).
  • “You want to keep track of your deductible expenses… categories such as your home, your vehicle, energy, travel, and more.” —Elizabeth (27:05)
  • Home office deductions require following IRS guidelines strictly; can't deduct the whole home or apartment. (27:36)
• Separating Business and Personal Accounts:
  • Open a separate business checking account and credit card to avoid commingling funds.

    “When I first started I did not have separate accounts, so I was commingling all my monies. And when I tell you it was stressful… opening a business account was a lifesaver.” —Elizabeth (29:14)

Important Tax Forms

• 1099-NEC Threshold Change:
  • In 2026, the threshold to receive a 1099-NEC moves from $600 to $2,000, but all income must be reported regardless of forms received. (27:50)

Retirement Contributions & Tax Impact

• IRAs and SEP/ SIMPLE Contributions:
  • SEP IRA and SIMPLE IRA for self-employed offer tax-deferred savings and can lower taxable income.
  • Roth IRA: Not taxed at withdrawal but must watch annual phase-out limits (under $153,000 modified AGI for singles in 2026).
• High Yield Savings Accounts:
  • Report interest as ordinary income; form 1099-INT issued if $10+ earned. (32:25)

    “That yield is considered ordinary income and it’s taxed at your marginal tax rate. Sorry, it’s not free money.” —Elizabeth (32:25)

Avoiding Common Pitfalls

• Deadlines and Penalties:
  • S Corps have an earlier deadline (March vs. April); missing it can mean IRS penalties. (30:10)
  • The First Time Penalty Abatement (FTA) can remove a penalty for first-time offenders. (30:35)

    “Since I was basically a first time offender, the IRS said, okay, you’ve paid all your taxes on time. This is first time doing it. We’ll let you slide.” —Elizabeth (30:40)

Notable Quotes & Memorable Moments

• “Apps are addicting. Gambling can be too. So combine the two... and it can become a problem.” —Ana Helhoski (13:21)
• “With an S corp you only pay self employment taxes on... a reasonable salary… the rest of your profit is exempt from self employment taxes.” —Elizabeth (23:59)
• “Opening a business account was a lifesaver and also having a business credit card so that I can see where all my expenses are.” —Elizabeth (29:14)
• "I was fined over $2,000... because I didn't realize the tax deadline was different... Apparently my accountant didn’t know that either." —Elizabeth (30:10)

Timestamps for Key Segments

• Sports Betting Legalization & Trends: 03:45–06:00
• How Betting Apps Work/Types of Bets: 05:27–09:08
• Prediction Markets: 09:39–11:59
• Risks & Responsible Gambling: 13:10–15:21
• Self-Employment Tax Filing Basics: 18:00–22:05
• Business Structure & Tax Optimization: 23:03–24:39
• Estimated Tax Payments Tips: 24:39–26:26
• Bookkeeping & Expense Tracking: 26:11–27:36
• Retirement Contributions & HYSA Taxes: 28:32–33:14
• Listener Q&A Wrap-up: 33:14–33:45

Takeaways & Actionable Advice

Sports Betting:

• It's easier and more tempting than ever to place bets, and prediction markets expand opportunities (and risks) significantly.
• Treat all forms of betting as entertainment — not investment — and set responsible limits.

Self-Employed Tax Tips:

• Know your filing status, business structure, and the forms required.
• Consult with a qualified tax professional, especially when making structural changes (like becoming an S Corp).
• Pay quarterly estimated taxes or increase withholding via your W-2 if applicable.
• Keep immaculate digital or paper records—track every expense and income source.
• Open separate business accounts to avoid stressful commingling.
• Contribute to retirement accounts (SEP, SIMPLE, IRA) to save for the future and reduce taxes.
• Remember to report all interest and income, no matter what forms you receive.

Memorable Anecdote:
Elizabeth’s $2,000 IRS fine due to a missed deadline for S Corp filing underscores the importance of knowing your deadlines and holding your accountant accountable.

If you need help:
For gambling addiction: National Council on Problem Gambling, 1-800-MY-RESET.

Contact:
Listeners can submit questions by voicemail/text at 901-730-6373 or email podcasterdwallet.com.

Next Episode Teaser:
How to pay for senior care.

This summary covers all vital discussions and insights from the episode, captures the NerdWallet team’s approachable style, and provides clear takeaways for listeners new and experienced alike.