Are Prediction Markets Legal? US Laws and State Rules

Are prediction markets legal in the US?

There is a federal framework for prediction markets. The Commodity Futures Trading Commission (CFTC) oversees registered exchanges and the products they list. But the claim that this framework overrides state gambling law for sports contracts is being contested in court.

Three different questions are often compressed into the word "legal":

• Is the exchange registered? Check the legal entity behind the trading venue.
• Can it offer this contract here? Sports contracts, election contracts and economic contracts need not receive identical treatment.
• Will the platform accept your trade? Its current restrictions are a separate practical check.

The CFTC's view is that federally regulated prediction markets can operate nationwide. That is the agency's position, not a substitute for reading the contrary court decisions and specific orders affecting a platform. For the wider division of federal, state and tribal authority, see our US gambling laws guide.

What is a prediction market?

A prediction market lets participants trade contracts tied to whether an event happens. Many use a yes-or-no structure with a fixed payout. Prices change as participants buy and sell; the contract rules specify the event, settlement source and deadline.

That simplified example follows the common binary structure described by the CFTC. Some contracts use more complex outcomes. Before entering any market, check what counts as a winning result, who determines it and whether a correction or cancellation changes settlement.

How does the CFTC regulate prediction markets?

A designated contract market, or DCM, is an exchange operating under CFTC oversight. It must satisfy requirements covering market integrity, financial resources, trading information, safeguards and dispute resolution. Registration belongs to the exchange entity; a familiar app name may be an intermediary rather than the venue itself.

Registration also differs from approval of an individual product. An exchange can submit a new contract through self-certification, stating that it complies with applicable law, or request Commission approval. A self-certified contract should not be described as though the CFTC separately reviewed and endorsed its merits.

Federal law also gives the CFTC a special public-interest power concerning event contracts involving specified subjects, including gaming, war, terrorism and assassination. That provision is part of the legal dispute over which contracts can be offered; it does not amount to a general license for any bet relabeled as a derivative.

On October 9, 2026, the CFTC announced a proposal to expressly include certain event contracts, including sports and political contracts, in the definition of a swap. It was a proposed rule, not a final change resolving the court cases.

Prediction market laws by state: the key differences

Prediction market rules depend on the exchange, contract and state. The selected developments below show why. Each row identifies the decision or action reviewed, and its limits. They are not a complete litigation register or a live platform-availability list.

The different appellate outcomes are why "federally regulated" and "unrestricted nationwide" should not be used interchangeably. Later orders, stays and platform restrictions can change the practical position without changing an exchange's federal registration.

For another state, start with the US state guide directory. Our Texas prediction markets guide provides a more detailed example of checking a state's position. A state omitted from this table should not be read as approved or prohibited.

Are prediction markets gambling or sports betting?

Sports prediction markets can involve the same sporting outcomes as sports betting, even though they use an exchange-contract structure. Whether particular contracts fall within federal derivatives law, state gambling law or both is the central legal dispute.

On a conventional sportsbook, you generally place a wager at the offered odds. On a prediction exchange, you buy or sell a contract whose price can change before settlement. That difference helps explain the product; it does not decide the jurisdiction question by itself.

Nor does adding the word "investment" eliminate the possibility of losing money. The CFTC describes event contracts as tools for both hedging and speculation. Our separate US sports betting guide covers state-authorized sportsbooks. A state's sportsbook permission does not automatically extend to a prediction-market business.

Are Kalshi and Polymarket legal?

Is Kalshi legal?

Kalshi is a CFTC-designated contract market. Its federal register entry does not resolve every state's objection to sports contracts: Kalshi is the named party in the differing New Jersey, Nevada and Sixth Circuit decisions discussed above.

Check the contract category and your location, rather than assuming that access to an account means access to every market. An exchange may also be available through a broker with its own customer restrictions.

Is Polymarket legal in the US?

Polymarket US has a federal regulatory framework through QCX LLC, doing business as Polymarket US. The CFTC's November 24, 2025 amended designation order removed a restriction on intermediated trading, subject to its stated requirements.

That is specific evidence about the US exchange. It should not be extended to every website, app or service using the Polymarket name, or treated as proof that every contract is available in every state. Match the legal entity in the terms to the regulator's record.

How to check a prediction market before trading

1. Identify the exchange and any broker. Read the legal entity names in the account agreement. Use the CFTC's DCM register and registration-checking guidance. A pending application is different from designated status.
2. Identify the specific contract. Read its rulebook, payout conditions, fees and settlement source. The CFTC's contracts and products page links to separate self-certified and approved-contract records.
3. Check the relevant state action. Look for the actual regulator notice or order. Confirm which entity, product and location it covers, and whether it is preliminary, stayed, modified or final. The state table above gives concrete examples of these distinctions.
4. Check current eligibility. Read the venue's age, identity and location requirements and the restrictions shown for the particular market. If they conflict with an old legal-state list, do not use that list as permission to bypass the restriction.
5. Keep the terms you relied on. Save the contract rules, trade confirmation and relevant notice. These help explain what happened if settlement or access is later disputed. The CFTC identifies clear contract terms and understandable account statements as customer rights.

These checks serve different purposes. Registration verifies the regulated entity; product rules explain the trade; state orders and current restrictions address where and how it can be offered.

What could change prediction market law?

Two developments deserve separate attention. The CFTC's October 9 proposal concerns the federal definition of a swap. A proposal invites comment and can change before any final rule; it does not erase an existing injunction.

Separately, New Jersey has asked the US Supreme Court to review the Third Circuit's Kalshi decision. As checked on October 11, docket 26-299 showed a pending petition, with the response deadline extended to November 9. It did not show that the Court had accepted the case or decided the merits.

Check for later court orders and final rules before relying on an earlier legal summary. A new filing, a granted appeal and a final legal ruling are different events.

Prediction market legality FAQs

Are prediction markets legal in all 50 states?

Prediction markets do not have one settled, unrestricted all-50-state answer. The CFTC asserts federal authority, while courts and states have treated particular sports contracts differently. Check the exchange, contract and applicable orders.

Does a legal prediction market guarantee your money is safe?

No. Federal oversight imposes duties on regulated markets, but event contracts can lose value or pay nothing. Registration is not a guarantee of profit or a promise that a disputed outcome will be resolved in your favor.

Can I use an app's age limit as the rule everywhere?

An app's age limit is an eligibility term, not a nationwide legal conclusion. For example, Michigan's injunction discusses the difference between Kalshi's 18-year threshold and Michigan's 21-year sportsbook framework.

If a market closes or you need help

Keep records and contact the exchange or broker about open positions and withdrawals. The CFTC complaint portal provides an official reporting route. If trading is becoming difficult to control, the National Council on Problem Gambling's help directory connects readers with support.