Last updated May 2026. Regulatory landscape is actively evolving.
This article is for informational purposes only and does not constitute legal advice. Regulatory requirements vary by state. Consult a qualified attorney for guidance specific to your situation.
If you've been trying to figure out whether prediction markets are legal in the United States, you're not alone — and you're not wrong to find the answer confusing. The short version: it depends on who you are, where you live, and what you want to trade. The longer version requires a brief tour through federal law, state regulators, and a pair of federal circuit courts that currently disagree with each other.
Here's what you actually need to know.
The federal framework: the CFTC is in charge (mostly)
At the federal level, prediction markets that qualify as event contracts fall under the jurisdiction of the Commodity Futures Trading Commission (CFTC). The CFTC's authority flows from the Commodity Exchange Act, which treats certain event contracts as swaps — financial instruments the agency has regulated for decades.
The clearest example of a fully CFTC-regulated prediction market is Kalshi. Kalshi operates as a Designated Contract Market (DCM) — the same regulatory category as major commodity exchanges — and is currently legal for users in more than 42 states. It went through years of regulatory review before launching, and it remains the benchmark for what a compliant US prediction market looks like.
Polymarket, which had long restricted US users, received CFTC approval in September 2025 and relaunched US operations in December 2025 as "Polymarket US," with full know-your-customer (KYC) verification. That's two major platforms now operating under federal oversight.
Where it gets complicated: the state-level conflict
The friction comes from a jurisdictional question that remains genuinely unsettled: does CFTC authority preempt state law entirely, or do state gaming and sports wagering commissions have a say?
The CFTC says it has exclusive authority. Several states disagree — particularly when the contracts in question involve the outcomes of sporting events. Their argument is that sports event contracts look a lot like sports betting, which is a domain states have historically regulated (and taxed).
Sports event contracts are currently restricted in at least nine states: Arizona, Illinois, Massachusetts, Maryland, Michigan, Montana, New Jersey, Nevada, and Ohio. In April 2026, the CFTC escalated the conflict by filing suit against Arizona, Connecticut, and Illinois, seeking permanent injunctions against state interference.
The courts are now the arena where this gets resolved — and so far, they're sending mixed signals. On April 7, 2026, the Third Circuit ruled in Kalshi's favor, holding that sports event contracts are swaps under the Commodity Exchange Act and that CFTC preemption applies. Nine days later, the Ninth Circuit heard Nevada's appeal, and the panel appeared to lean toward the state's position. A circuit split is forming, which means the question may ultimately reach the Supreme Court.
What this means if you just want to participate
For most people in most places, the practical picture is clearer than the legal headlines suggest.
Political markets, economic markets, and other non-sports event contracts are broadly accessible through regulated platforms. If you're in one of the 40+ states where Kalshi operates, you can open an account and trade today. Polymarket US is similarly available with KYC verification.
Sports event contracts are a different story. If you're in one of the nine states listed above, those specific markets are restricted or unavailable on regulated platforms — and that situation is unlikely to resolve quickly.
There is also pending legislation in Congress that would further restrict prediction markets that resemble sports betting or casino gaming, though no bill has passed as of this writing.
The bottom line
Prediction markets as a category are not illegal in the United States. The regulated platforms — Kalshi and Polymarket US — operate lawfully under federal oversight. The legal uncertainty is concentrated in one specific area: sports event contracts, and the unresolved question of whether state gaming law can override CFTC preemption.
That question is being actively litigated in multiple federal courts simultaneously. The outcome will shape the industry for years.
This is exactly the kind of story Consensus will keep tracking. Bookmark this piece — it will be updated as court decisions, regulatory actions, and legislation develop.
This article is for informational purposes only and does not constitute legal advice. Regulatory requirements vary by state. Consult a qualified attorney for guidance specific to your situation.
— Tony
Founder at Consensus
www.PredictionMarkets.media
@ReadConsensus