Protocols like Degen Coin Flip — and other apps where the outcome is determined primarily by chance — are typically viewed as gambling.
The general tax treatment
If you're gambling recreationally:
Gambling winnings are generally taxable as ordinary income.
Gambling losses can generally only be deducted up to the amount of your gambling winnings for the year, and only if you meet the applicable requirements for claiming those losses. The rules have changed in recent years, so the exact treatment depends on the tax year and your circumstances.
For example, in the US, gambling losses can only offset gambling winnings — they can't be used to offset your capital gains from trading.
How to label gambling activity in Awaken
Awaken has native support for Degen Coin Flip, so those transactions are handled automatically.
For gambling activity on other apps, you'll need to label your transactions manually. The right approach depends on whether you came out ahead for the year:
If you lost money overall: Label all of your gambling transactions as non-taxable. Since losses can't be claimed beyond your winnings, there's nothing to report — labeling everything non-taxable reflects that.
If you made money overall: Label the transactions where you wagered funds as income expense, and the transactions where you received winnings as income. This way, the two net out to the total amount of income you actually earned from gambling, which is what gets reported.
This article is for general information only and isn't tax advice. Gambling tax rules vary by country and change over time — check with a tax professional about how they apply to your situation.