Are prediction markets legal in the US?

Americans who have wanted to wager on sports got a gift in the form of prediction markets. Of course, prediction market platforms vary from sportsbooks in slight but meaningful ways. But the best news for potential traders is the fact these sites are legal in the majority of the United States, even in places like California, Texas and other states where sports betting has been banned.Yes. Sites like Kalshi and Polymarket are legal and operational due to their status as regulated prediction markets platforms.They are regulated by the Commodity Futures Trading Commission (CFTC), which has taken a less-restrictive stance under the current administration.The short answer for US tradersYou might be wondering, “Is Polymarket legal in the US?”, and the answer is yes. Because prediction markets are federally regulated, they are available to most Americans age 18 and older. Prediction market platforms effectively serve as financial exchanges, which allow trading on outcomes. But all transactions are peer-to-peer, which means there is no vig for users to account for.What counts as a legal prediction market As an exchange, users can buy and sell shares on outcomes and constantly trade them at any time before settlement or hold them until they settle.When you purchase shares in outcomes, you are buying them from fellow users. You may bid on shares at any price, and also sell them to any users at any time. How prediction markets are legal: CFTC regulationPrediction markets are legal in the US because platforms like Kalshi and Polymarket are registered with the CFTC as Designated Contract Markets (DCMs), the same license structure governing futures and options exchanges. That makes event contracts federally regulated derivatives, not wagers, which is the legal distinction separating them from state-licensed sports betting or casino gambling.Event contracts as CFTC-regulated derivativesWhen you buy shares in an outcome, you are purchasing a contract the same way you would buy a share in a company.Despite the fact that you can sell that share as quickly as you bought it, the distinction of outcomes as shares is what allows prediction markets to operate under the federally regulated system.Why federal regulation enables nationwide accessThe distinction between a financial institution and a betting platform is what allows the CFTC to oversee prediction markets. Federal regulation means these platforms can operate nationwide, unlike state-regulated sportsbooks. Thus, you can freely trade on outcomes and purchase contracts with prediction sites across the country. Which platforms are legal in the US?There are more legal prediction market platforms every day, including new launches from sportsbooks like FanDuel and DraftKings that have begun operating exchanges that empower users to predict.But these are the platforms that are most commonly associated with prediction market trading in the United States.KalshiIf you’re wondering “Is Kalshi legal?”, the platform launched in 2021 and is one of the longest-standing and most well-known platforms for Americans.Kalshi offers trading on sports prediction markets, global affairs, politics, entertainment and even the weather. It also uses its standing as a financial institution to give existing users 3.25% APY when they keep at least $250 in their accounts, effectively serving as a high-interest savings account.Kalshi also has one of the most generous new-user promos among current prediction market promos.When you sign up with the Kalshi promo code ALCOM, you’ll get $25 in bonus trades when you predict at least $25 in trades over the first 30 days.Polymarket US and the Polymarket AppIs Polymarket legal in the US? Yes, as of December 2025, but it took a long road to get there. Polymarket, founded in New York in 2020, was banned from operating in the US for nearly four years after the CFTC found it had been offering event contracts without registering as a licensed exchange. It only regained legal access after acquiring QCEX, a CFTC-licensed exchange and clearinghouse, which gave it the regulatory pathway to relaunch domestically as a properly registered Designated Contract Market.Since resuming US operations, Polymarket has moved quickly to establish itself, particularly with sports fans, striking official prediction market deals with MLB, MLS and the NHL. If you want to check out the app, using Polymarket promo code ALCOM will unlock $20 in site credit when you deposit at least $10 into your account. Other platforms and brokersNew online prediction market platforms are launching almost weekly. But ProphetX is one of the oldest peer-to-peer among best prediction markets, launching as Prophet Exchange in 2019. It is not available in every state, and unlike Kalshi and Polymarket is also not available overseas, but it presents probabilities as American odds rather than share prices.The ProphetX promo code ALCOM will open up $20 in site credit after you make $10 in trades. Robinhood, Underdog, Crypto.com, Fanatics, as well as FanDuel and DraftKings have all launched prediction market platforms. For Underdog, Fanatics, FanDuel and DraftKings, each prediction market is available through the same sportsbook/daily-fantasy website you may have already.Which states restrict prediction markets?Prediction market sites tout their coast-to-coast availability, but trading at prediction markets is restricted in some places.States where sports betting is legal, like New Jersey, Massachusetts, Nevada and Arizona, have filed cease and desists on prediction market platforms due to their similarities to sports betting. Utah and Minnesota have banned prediction markets for the same reason, and Washington State’s ban on certain sports prediction markets and pop culture, went into effect Aug. 19.Where prediction markets are available Prediction markets are available in the following states:AlabamaAlaskaArkansasCaliforniaColoradoDelawareFloridaGeorgiaHawaiiIdahoIllinoisIndianaIowaKansasKentuckyLouisianaMaineMarylandMississippiMissouriMontanaNebraskaNew HampshireNew MexicoNew YorkNorth CarolinaNorth DakotaOhioOklahomaOregonPennsylvaniaRhode Island South CarolinaSouth DakotaTennesseeTexasVermontVirginiaWashington, D.C.West VirginiaWisconsinWyoming Contested/restricted states There are more than a handful of states that do not offer prediction trading. ArizonaConnecticutMassachusettsMinnesotaNevadaNew JerseyUtahWashington**- Some markets are banned under state lawsPrediction markets vs. sports betting and gamblingThere are similarities between prediction markets and sportsbooks, but there are important distinctions. Event contracts vs. sportsbook bets Prediction markets operate on contracts and derivatives, which is the important distinction. Plus, they are peer-to-peer trading sites, which means there is no “house” to consider. The PASPA U.S. Supreme Court decision of 2018 left states to regulate sports betting. As such, each state is responsible for creating tax structures and sports-betting licenses, while leaving the legalities up to the voters. That is why sports betting is only legal in about two dozen states, whereas prediction markets operate in 40-plus.Are prediction markets gambling? Are prediction markets gambling? No, not legally, at least not under federal law. Prediction market platforms like Kalshi and Nadex are registered with the CFTC as Designated Contract Markets, which classifies their event contracts as regulated derivatives (the same category as futures and options), not as wagers. That classification is precisely what exempts them from state gambling and gaming license requirements, since federal commodities law is understood to preempt state betting statutes in this area.How to trade prediction markets legally in the USSigning up with prediction market sites can be as easy as connecting your Apple or Google accounts and adding our exclusive promo code. Then you can make a deposit and begin trading.Choose a regulated platform and verify your accountOf course, trading on financial platforms is still confined to Americans who are 18 years or older. You will need a valid email address and will need to provide a photocopy of your ID to sign up. You may also need to provide your Social Security number or a live selfie to complete the Know Your Customer verification.Fund your accountFunding your account at Kalshi is as easy as completing a purchase at an online retailer. You can do so with Apple Pay/Google Pay, ACH transfers or debit cards, as well as an eWallet like Venmo or PayPal.There often is a $10 minimum deposit when funding your account. To withdraw from your account, traditionally you will need to have deposited in that manner as well. Are prediction markets safe? Risks and responsible tradingLike anything involving real-money trading or predictions, there is inherent risk when making predictions. Even if you are trading outcomes as you would stocks, your investment could plummet if the outcome does not go in your favor. We always recommend trading only what you can afford to lose. What regulation does and doesn’t protectCFTC regulation of prediction markets protects the integrity of the exchange itself. It requires platforms to register as licensed derivatives exchanges, follow rules on market manipulation, fraud, and clearing, and keep customer funds properly segregated and accounted for. What it doesn’t do is protect you from losing money: regulation has nothing to say about whether your prediction is right, doesn’t cushion you from bad trades, and, unlike state gambling licenses, it doesn’t universally require built-in spending limits or self-exclusion tools, since those protections currently vary by platform rather than being mandated across the industry. In short, federal oversight means the market is legitimate and the rules are enforced; it doesn’t mean the outcome is safe for your wallet.Responsible trading and capital at riskOf course, prediction market trading can be habit-forming, and your money is at risk every time you trade. That’s why it’s worth predicting responsibly.Here, the picture is uneven. Online sportsbooks are required to offer a baseline of responsible-gaming tools (deposit limits, cooling-off periods, self-exclusion) as a condition of their license. Prediction markets aren’t held to that same standard, and protections vary a lot from platform to platform: some have started rolling out their own deposit limits, trading breaks and self-exclusion options, while others offer little to nothing in the way of safeguards. Before you trade, it’s worth checking what tools, if any, your specific platform actually provides rather than assuming they’ll be there.Is the legal status settled? Federal vs. stateNo. States and the CFTC are actively fighting over who has authority here, with lawsuits piling up on both sides. A similar fight over sports betting (PASPA) reached the Supreme Court in 2018, so some analysts expect this could too, but that’s likely years off.Federal regulation vs. state challengesNew York, Nevada, Arizona and Massachusetts have sued or taken enforcement action against Kalshi and Polymarket, calling them unlicensed gambling operations. NY Attorney General Letitia James: “Prediction markets like Kalshi are gambling platforms, plain and simple.” Nevada even won a restraining order against Kalshi. The two core complaints: these platforms skip the taxes sportsbooks pay (New York taxes operators at 51% and the AGA estimates $1.2 billion in diverted gaming tax revenue nationwide), and they let in 18-year-olds while most state gambling laws require age 21.How the picture could changeRight now, the federal government backs the industry. CFTC Chairman Michael Selig has filed briefs arguing federal law preempts state gambling claims, including in Kalshi’s Ninth Circuit appeal. That support should hold as long as Republicans control Washington, which they will at least through the 2026 midterms. A shift in Congress could bring tighter legislation and a bigger change likely waits for the 2028 election.Are prediction markets legal? FAQHow are prediction markets legal in the US?Prediction markets are legal because they are federally regulated by the Commodity Futures Trading Commission.Which prediction market platforms are legal in the US?More launch seemingly every week, but Kalshi, Polymarket, ProphetX, FanDuel, DraftKings, Fanatics, Underdog, Robinhood and Crypto.com all offer legal prediction market trading in the United States.Why are prediction markets legal when sports betting isn’t everywhere?Prediction markets are regulated as financial exchanges, like the stock market. That is why they are federally regulated instead of being regulated by individual states, which online sportsbooks are.Are prediction markets legal in all 50 states?Not quite. They’re federally legal nationwide under CFTC oversight, but several states, including New York and Nevada, have sued or moved to block platforms like Kalshi and Polymarket, arguing they’re unlicensed gambling operations.Are prediction markets gambling?Technically no, since prediction markets are regulated financial exchanges. When did prediction markets become legal in the US?Prediction markets have been legal in the United States since the CFTC began overseeing them in 2004. Is Polymarket US legal the same way Kalshi is?Yes. But Polymarket was only re-established in the past year after serving a three-year ban in the United States between 2022-25. Curious to see the platform for yourself? Sign up with Polymarket US using promo code ALCOM and deposit $10 to unlock a $20 trading bonus. Are prediction markets safe / is my money protected?The money you have deposited is safe, since the sites use encryption technology to protect your account. However, like gambling sites, you are subject to the risk of losing money by trading on prediction markets like Polymarket and Kalshi.If you purchase a product or register for an account through a link on our site, we may receive compensation. By using this site, you consent to our User Agreement and agree that your clicks, interactions, and personal information may be collected, recorded, and/or stored by us and social media and other third-party partners in accordance with our Privacy Policy.