Are Prediction Markets Legal in the US?

Short answer: yes, with real qualifications. Federally regulated prediction markets are legal in the United States, and as of mid-2026 the most-watched venues operate under explicit U.S. oversight. But "legal" here is not a single settled fact. It is a federal green light running into a wall of state objections, with courts split, a major federal rulemaking in motion, and several questions still genuinely open.

This piece lays out what is settled, what is contested, and what is still moving. It reflects the state of play as of July 2026, and it is informational, not legal advice.

The short version, up top

A prediction market lets people buy and sell contracts that pay out based on whether a future event happens. In the U.S., the venue that matters most for legality is the federal one: the Commodity Futures Trading Commission, or CFTC, the same agency that oversees futures and swaps markets. A handful of exchanges have registered with the CFTC as Designated Contract Markets and offer these contracts under federal rules. Trading on those exchanges is lawful at the federal level. The fight is over whether individual states can override that.

So the honest framing is two-layered: federally, prediction markets on CFTC-regulated exchanges are legal. At the state level, several states are actively trying to block them, and the courts have not finished sorting out who wins.

Who the regulator is, and why it's the CFTC and not a gambling board

This is the distinction that explains everything else. A regulated prediction-market contract is treated as a financial instrument — a "swap" under the Commodity Exchange Act — not as a casino wager. That puts it under the CFTC rather than under state gaming regulators. The mechanics look more like a one-dollar futures contract than a sportsbook ticket: a binary contract settles at $1 if the event occurs and $0 if it doesn't, and its price in between reads as an implied probability.

An exchange that wants to offer these legally registers with the CFTC as a CFTC-regulated exchange. That status brings real obligations — market surveillance, reporting, recordkeeping, and the rest of the federal derivatives rulebook. It is the line that separates a sanctioned U.S. venue from an offshore site.

What's actually legal right now: the platforms

Three names anchor the U.S. landscape, and their legal postures differ in ways worth getting right.

Kalshi is the cleanest case. It is a CFTC-regulated exchange built from the ground up for event contracts, and it operates openly to U.S. users. Its right to list political-event contracts was settled the hard way: in September 2024 a federal district court ruled that the CFTC had overstepped in trying to block Kalshi's election markets, and in May 2025 the CFTC dropped its appeal, leaving that pro-Kalshi ruling standing. Since early 2025, a more permissive CFTC has also allowed sports-event contracts, which now drive the bulk of trading volume on these venues. According to the Congressional Research Service, roughly $39.7 billion traded on Kalshi over the trailing year, about 87% of it on sports.

Polymarket US is the newer entrant and the one most people get confused about. The large, on-chain Polymarket that built its reputation on election markets is domiciled offshore and blocks U.S.-based users. To re-enter the U.S. legally, Polymarket bought a CFTC-licensed exchange and clearinghouse — QCEX (the QCX exchange and QC Clearing) — for $112 million in mid-2025, and the CFTC issued an Amended Order of Designation in November 2025 permitting an intermediated, fully regulated U.S. platform. That regulated arm is Polymarket US. It is a separate, federally registered venue, not the global site with a U.S. doormat.

Polymarket — the original — sits in the third bucket: an on-chain market, priced in USDC, that restricts U.S. access rather than operating as a registered U.S. exchange. For a U.S. resident, the legal venue is the regulated arm, not the offshore one. (For the practical differences between these models, see Kalshi vs. Polymarket.)

Legality in the U.S. runs through CFTC registration. Offshore or purely on-chain access is a different question with a different, riskier answer for U.S. users.

The contested part: states are pushing back hard

Here is where "legal" stops being simple. Several states view these contracts — especially sports and election markets — as gambling that requires a state license, and they have moved to block them. The result is a sprawling, fast-moving fight between federal preemption and state gaming authority.

The federal argument is that the Commodity Exchange Act gives the CFTC exclusive jurisdiction over contracts traded on its registered exchanges, which preempts conflicting state law. The state argument is that gambling has always been theirs to regulate, and a federal derivatives label shouldn't erase that.

Courts have landed on both sides, which is the single most important thing to understand about the current moment:

• On April 6, 2026, the U.S. Court of Appeals for the Third Circuit, in KalshiEX LLC v. Flaherty, sided with Kalshi against New Jersey — holding that sports-event contracts are "swaps" and that federal law preempts state gambling law as applied to CFTC-licensed markets. But this was an appeal of a preliminary injunction, not a final ruling on the merits, and it drew a notable dissent arguing that gambling regulation traditionally belongs to the states. It signals where one appeals court is leaning; it does not end the matter.
• At the district-court level, results have been genuinely mixed. State regulators have prevailed against Kalshi at the preliminary stage in places like Maryland and Ohio. Nevada ran the other way and then reversed: Kalshi won a federal preliminary injunction against the state in April 2025, and the same judge dissolved it that November — so even a single state has swung back and forth rather than settling cleanly.
• The Ninth Circuit heard Nevada's appeal in April 2026, and observers read the panel as leaning toward the state — which raises the real prospect of a circuit split that only the Supreme Court could resolve.

Meanwhile the CFTC has gone on offense, suing roughly nine states — including Arizona, Connecticut, Illinois, New York, and Wisconsin, among others — to stop them from enforcing against federally regulated venues, with Kalshi filing parallel suits of its own. The most aggressive state response came from Arizona, which brought criminal charges against Kalshi in early 2026. Dozens of states have lined up in amicus briefs defending state authority.

So the accurate statement is narrow: a federal appeals court has endorsed preemption in one circuit at the preliminary stage, several district courts disagree, and the question of whether states can bar these markets is unresolved nationally.

Where the courts have landed

In the weeks since, the fight sharpened, and the "prospect of a circuit split" above is no longer hypothetical. In July 2026, a federal district judge in New York (KalshiEX LLC v. Williams, S.D.N.Y., Judge Analisa Torres) denied Kalshi a preliminary injunction and held that the Commodity Exchange Act does not preempt New York's gambling law — the direct counterweight to the Third Circuit's New Jersey ruling, and the industry's most consequential loss so far. Kalshi appealed to the Second Circuit the same day. Parallel splits are now playing out inside single circuits: the Sixth Circuit has consolidated a pro-Kalshi Tennessee case against an anti-Kalshi Ohio case for argument in late July, and the Ninth Circuit is juggling unresolved fights across Nevada, Washington, Arizona, and California tribal lands.

Two other developments cut in opposite directions. Minnesota became the first state to pass a statutory ban on prediction-market platforms, signed in May 2026 and set to take effect August 1 — but a federal judge preliminarily blocked it in late July 2026, so the ban is enjoined, not in force. North Carolina went the other way entirely, enacting a July 2026 law that recognizes the CFTC's authority and taxes trading-fee revenue rather than banning the platforms.

Zoom into the actual map and it turns granular and contradictory: the same company can operate freely in one state, be blocked by a judge in the next, and face a fresh lawsuit in a third. The table below captures the states where the fight has produced something concrete — a ruling, an injunction, a statute, or an active suit. In the remaining states not listed, no formal action has surfaced and federally regulated venues generally operate without a specific local challenge. Read it as a dated snapshot: nearly every entry is preliminary and under appeal, and it changes week to week. Each state below links to its own profile; for all 51 jurisdictions — including the quiet ones — see the state-by-state legality map, and for the underlying dockets see the case index.

For the living, filterable version of this table — sortable by status, with a chronological view of every ruling — see the prediction market litigation tracker.

Where a court has actually granted a state's request — Nevada, Massachusetts, Michigan, and Washington among them as of July 2026 — platforms have restricted or geofenced local access rather than defy the order, while several other venues keep operating under protective federal injunctions during appeal. Because these orders shift constantly, the only reliable answer to "is it available where I am" is the venue's own current, location-specific eligibility check, not a map frozen at one moment. For the full roster of federally registered venues behind these fights, see every CFTC-regulated prediction market.

The federal rulebook is being rewritten right now

On top of the litigation, the CFTC is writing the formal rules that will define which contracts are allowed. On June 10, 2026, it published a 267-page proposed rule, opened for a 45-day public comment period. It is a proposal, not an enacted regulation, and nothing in it is binding while the comment window runs. The proposal's logic is "price discovery and public interest": contracts that surface useful information and resist manipulation are favored; contracts that don't are disfavored.

Under the proposal, most sports-outcome contracts — game results, team performance — would be permitted, on the theory that teams function as economic enterprises. But it would prohibit, or treat as likely contrary to the public interest, a list of contract types seen as manipulable: bets on individual player injuries, officiating decisions, in-game prop-style outcomes, youth sports, and events tied to war, assassination, or terrorism. CFTC leadership framed it as drawing a durable line between legitimate markets and the contracts Congress wanted scrutinized.

Because this is a proposed rule in its comment period, the specifics can still change before anything is finalized. But the direction is clear: the federal government is moving from a case-by-case posture toward a codified framework.

Common questions, answered plainly

Is it legal for me, personally, to participate?

On a CFTC-regulated U.S. exchange, trading event contracts is federally lawful, subject to the exchange's own eligibility rules (you must be of age and meet its account requirements). The wrinkle is your state: if you're in a state actively enforcing against these venues, access and availability can be restricted or contested where you live, and that map is changing. This is exactly the kind of question to confirm against current, location-specific guidance rather than a general article.

Is this the same as sports betting?

Legally, no — and that's the whole fight. A regulated prediction-market contract is structured as a federally overseen swap, not a state-licensed wager, which is why it falls to the CFTC. States that disagree are arguing precisely that the resemblance to a sportsbook should put it under their gambling laws. Functionally the two can look similar to a user; legally they are being treated as different instruments, for now.

What about offshore or on-chain sites?

Venues that aren't CFTC-registered, including the offshore version of Polymarket, restrict U.S. users for a reason. The legal, regulated path for a U.S. resident runs through a registered exchange.

Where this leaves you

The trajectory matters more than any single snapshot, because the snapshot keeps changing. Federally, prediction markets have moved from contested to broadly sanctioned, with a formal rulebook taking shape. At the state level, the fight is live, the rulings conflict, and a Supreme Court answer on preemption is plausible within the next year or two. Expect the list of permitted contracts and the map of where they're available to keep shifting as the rule finalizes and the courts rule.

If you want to see what's actually trading on these venues right now, browse the markets. For the mechanics underneath all of this, start with what a prediction market is.

This explainer reflects the U.S. legal and regulatory landscape as of July 2026. It is informational and not legal advice. The situation is changing quickly; verify current status before relying on it.