A Guide To Prediction Markets Legality In The US

Prediction markets pros and cons

Pros and Cons

• Make predictions on real-world events
• All markets have simple yes/no outcomes
• Plenty of different markets available

• Speculation about the legality of prediction markets

What are prediction markets?

There are plenty of questions regarding prediction markets, including what a prediction market is, so we’ll start there. A prediction market is a platform where people trade on outcomes of real-world events, from the outcome of huge elections to how many tweets Elon Musk will send in any given month. There are also sports outcomes typically listed among a dozen or so different categories, and each is a simple binary yes/no outcome, making it simple, accessible, and very newbie-friendly.

These outcomes can be traded before the event resolves, and the price changes as the real-world situation develops. This means users can buy or sell outcomes to generate a profit or mitigate a loss at any time while the event is still live. Platforms like Kalshi and Polymarket have brought this into the mainstream, and many users will make a Kalshi vs Polymarket comparison before trading these markets themselves.

Kalshi

Kalshi is the big name for users who want to make simple yes/no predictions on politics, entertainment, economics, weather, and sports events. Users can trade outcomes based on their knowledge and how the market moves.

Polymarkets

Polymarkets joined the competition from late 2025, offering the same categories as Kalshi, and working using the same principles. This makes Polymarkets a match for Kalshi in many areas and could see some user migration.

Are prediction markets legal in the US?

Currently, the main factor in the legal status of prediction markets in the US is classification and who they are regulated by. Instead of being classed as gambling, prediction markets like Kalshi, Polymarkets and RobinHood class themselves as financial exchanges and are supervised by the Commodity Futures Trading Commission (CFTC). This means they do not act as the ‘house’ like a sportsbook, with Kalshi, registered by the CFTC as a Designated Contract Market (DCM), which puts them alongside options traders and not sportsbooks, so state gambling laws do not apply.

This, in principle, makes prediction markets legal in the US, and has seen a surge in users in the last couple of years. This happened first with Kalshi, and they were joined in 2025 as the CFTC allowed them to operate in the US. There is, as you might expect, some opposition to this view.

Are prediction markets legal in 2025?

While the Polymarket vs Kalshi vs Robinhood debate regarding which is the best platform goes on, the legal status of prediction markets is still the subject of some debate. This centers around whether these event contracts, especially on the outcome of sports and election events, where comparable to trades, or would actually count as gambling and be subject to the same regulations as sportsbooks. This has resulted in numerous cease and desist letters in some states, especially regarding those markets that you might normally see in a regular sportsbook, and many of these have been countered or resulted in injunctions.

The bottom line here is that even though these platforms are allowed to operate, especially since the CFTC regulation, the situation is still changeable, so always check the T&Cs and local laws before signing up with any platform.

Prediction markets are currently legal in the US

There has been some confusion about the legality of prediction markets in the US, and while they are currently legal, the situation is the subject of some debate. The inclusion of predicting sports outcomes as well as those regarding politics is seen as overlapping the areas normally covered by sportsbooks. However, the classification and regulation by the CFTC means that prediction markets are considered the same as futures trading.

This is currently the subject of some legal back and forth, so always check the T&Cs of any prediction market before joining, as the situation can be subject to change. If you want to try trading on reputable prediction market sites, you can do so by tapping the banners on this page.

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