Are prediction markets legal in the US?

Why prediction markets are legal in the US

A prediction market sells event contracts. Each one is a yes-or-no question that pays $1 if the answer is yes.

Under the Commodity Exchange Act, those contracts are derivatives when they trade on a CFTC-designated exchange. The CFTC supervises them, not a state gaming board.

That is why the big apps work nationwide without 50 state licenses. Polymarket US and Kalshi hold that designation. Robinhood, Webull and Coinbase route orders to exchanges that do.

Federal approval is not the end of it. States say a sports contract is a bet, whatever exchange lists it, and several have gone to court.

How is Kalshi legal?

Kalshi was the first US exchange built for event contracts. The CFTC designated it a contract market on November 4, 2020.

Then it fought its own regulator. The CFTC blocked contracts on which party would control Congress, and Kalshi sued.

In September 2024, a federal judge in Washington ruled the CFTC had overstepped. Election contracts went live within days.

The CFTC dropped its appeal in May 2025. Today Kalshi lists politics, economics, crypto, weather, culture and sports.

Sports are where its legality is contested. Our Kalshi review covers each lawsuit, and our California page shows how one state's fight plays out.

Is Polymarket legal in the US?

Yes, through Polymarket US, the app built for Americans. It runs on QCX LLC, which the CFTC designated as an exchange on July 9, 2025.

It took four years to get there. In January 2022, the CFTC fined Polymarket $1.4 million for running unregistered markets, and it blocked US users.

Polymarket bought QCX and its clearinghouse for $112 million in July 2025. A CFTC order in November 2025 let it serve US customers through brokers.

Polymarket US is open everywhere except Nevada, where a court order bars it. New York sued it on September 24, 2026, and several states contest its sports contracts.

The international site, polymarket.com, is a different product. It is not CFTC-regulated, and Americans can only close old positions there. Our Polymarket review covers both.

Which states restrict prediction markets

No state has shut every app out. The fights are narrower, and most are about sports contracts.

Some go further. Arizona's charges cover election contracts, Washington's order reaches most categories, and New York's suits target every event contract.

Minnesota passed a ban on event contracts, but a federal judge put it on hold in July 2026.

The table lists every state where an app's status differs from its national position. Each state links its own page.

Every state and DC has its own page: which apps accept its residents, what it has said, and how that compares with its sports betting law.

Why the courts disagree

Every case turns on one question. Is a sports event contract a swap under the Commodity Exchange Act?

If it is, federal law pushes state gambling law aside. If it is not, states can enforce their own rules.

The Third Circuit said yes on April 6, 2026, in New Jersey's case. Kalshi won.

The Ninth Circuit said no on August 28, in Nevada's case. The Sixth Circuit agreed on September 25, in cases from Ohio and Tennessee.

So the same contract is federally protected in New Jersey and a state matter in Nevada. That split is why the Supreme Court is likely to step in.

What the CFTC is doing

The regulator has changed course. In June 2024, it proposed barring exchanges from listing contracts on elections and games.

It withdrew that proposal on February 4, 2026. On June 10, it proposed new rules that keep most sports contracts.

The draft would bar contracts on injuries, officiating calls and single in-game actions. Comments closed on July 27.

Just before that, 44 states wrote that the CFTC has no authority over sports contracts at all. No final rule has been issued.

Prediction markets vs sports betting

The products look alike. You pick a side, pay a price and collect if you are right.

The structure differs. A sportsbook sets the odds and takes the other side. On an exchange, you trade against other people, and the exchange charges a fee.

The oversight differs too. A state licenses and taxes each sportsbook. A CFTC exchange needs no state license, which is exactly what states object to.

That is also why these apps reach states with no legal sports betting, such as California and Texas.

Insider trading and other federal rules

Federal law still governs how you trade. Using secret or stolen information can be a crime, on these apps as anywhere else.

In April 2026, prosecutors charged a US soldier with trading on classified plans, for a profit of about $410,000.

In May, they charged a Google engineer who allegedly made about $1.2 million from inside information.

Both cases target the traders, not the apps. The exchanges run their own market surveillance too.

What would settle it

Three things could. The likeliest is the Supreme Court, which New Jersey petitioned on September 2, 2026.

A ruling there would bind every state at once.

The CFTC could finish its rule. That would not end the fight over state law, but it would set what exchanges may list.

Congress could amend the Commodity Exchange Act to say who regulates sports contracts. No such bill has passed.

Until then, the answer depends on your state and your app.

The latest rulings and actions

The newest matters on file, each linked to its docket or report. The full list is in our litigation tracker.

Are prediction markets legal outside the US?

It depends on the country and the app. Kalshi restricts trading in 55 countries under its member agreement.

Polymarket's international site blocks 4 countries outright and limits 36 more to closing positions.

Local law can still treat event contracts as gambling where neither app restricts them.

Our availability table lists both apps, country by country, with how to fund from each.