June 8, 2026
by James Pacheco
Prediction markets became much more popular following the 2024 election. Ever since, they’ve continued rising in popularity. That’s largely because of the model that they operate on and the fact that they offer trading on multiple real-world events.
You’ve probably asked the question, “Are prediction markets legal?” and for good reason, seeing as they’re an emerging trend in the US. We’ve asked the same question, and after making some findings, we’ll answer that question in this guide. You’ll learn how they work, the regulations guiding their operations, and a couple of other related things. Keep reading.
The Best Prediction Market Sites for 2026
Quick Facts About Legal Prediction Markets in The US
- Prediction market sites support the trading of event contracts based on the outcome of real-world events.
- They are regulated by the Commodity Futures Trading Commission (CFTC) and should be available in all 50 US states.
- However, some US states, such as Hawaii, Kentucky, New York, and Nevada, have either restricted or are looking to restrict or regulate their operations within their jurisdictions.
- Kalshi and Polymarket are two of the more popular prediction market sites in the US.
What Are Prediction Markets, and How Do They Work?
Prediction markets are basically online exchanges where you trade “Yes” and “No” event contracts that are based on the outcome of real-world events. These event contracts are binary and settle at $1 if the event you traded on occurs or $0 if the traded event doesn’t occur.
One main reason for the growing popularity of legal prediction markets in the US is that you can trade contracts on multiple categories of real-world events, such as sports, politics, cryptocurrency, economics, climate, culture, and entertainment.
Another Reason Why Prediction Markets Are Making the Headlines Is the Peer-To-Peer Trading Model that They Run
With this model, event contract prices aren’t fixed. Rather, they are determined by the opinions of other traders (on the prediction market site) about the likelihood of an event occurring.
In a way, prediction markets are similar to iGaming sites and sportsbooks in particular, which explains why the prediction markets vs sportsbooks debate comes up. However, there are marked differences between both sites which we’ll describe below:
| Prediction market sites | Sportsbooks |
| Contract prices are based on trader sentiments | Runs on fixed betting odds |
| Peer-to-peer trading model | Bets are against the sportsbook |
| Uses “Yes” or “No” event contracts | Uses traditional betting odds |
| Covers multiple categories of real-world events | Covers mostly sports and esports |
Now that you understand how prediction markets work, up next is a discussion about their legal status in the US.
Are Prediction Markets Legal?
Yes, they are. Prediction markets are regulated by the Commodity Futures Trading Commission (CFTC), which is a US federal agency that has regulatory oversight over the US financial derivatives market. Here’s how prediction markets are legal in the US.
These sites run on a peer-to-peer trading model and are registered under the CFTC, making them legal under US federal laws.
Bear in mind that some financial derivatives, such as futures, support trading on the future prices of specific commodities.
Prediction Markets Simply Expand This Model to Include Contract Trades on Real-World Events
Since prediction market sites in the US are overseen by the CFTC, which is a federal agency, you may be able to sign up and trade event contracts in all 50 US states.
That pretty much answers the question “Where are prediction markets illegal?”. However, some state regulatory bodies rank them as unregulated online sports betting sites, and we’ve seen reports of US state legislatures taking restrictive positions on the operations of these sites within their jurisdictions.
For instance, a legislative bill was recently passed by the Hawaii House to make prediction markets illegal within the state, and Kentucky may be looking to impose taxes on the transaction fees of prediction market sites.
There are talks about imposing restrictions on prediction markets in New York, and the Nevada Gaming Board and state courts in Nevada are looking to block Kalshi’s operations within the state.
Nonetheless, nothing had been officially announced at the time of writing. We’ll update this page if there are any legislative actions regarding prediction markets in the above-listed states or other US states.
A Quick Look at Two Top US Legal Prediction Market Sites
Prediction markets have long been a part of the US, although they existed in an informal and unregulated zone until sometime in 2024. That was when Kalshi, one of the more popular prediction market sites in the US, won a legal suit against the CFTC.
Towards the end of 2025, Polymarket received CFTC approval to operate in the US after being required to close shop to US traders in 2022. However, you’d have to join a waitlist if you’d like to use its app.
One of the more common questions you’d find about Kalshi is, “Is Kalshi legal?”. Federally, yes, but several states have challenged it. There are some questions about the site’s legal status and whether its prediction market app may be considered a sports betting product.
Likewise, given its recent CFTC approval, we’d say Polymarket is legal, but state-level restrictions remain.
Since both sites are two of the more popular options in prediction market spaces, it’s common to find Kalshi vs Polymarket comparisons both online and offline. In our view, both sites offer legit contract trading experiences and are both worth checking out if you meet their eligibility requirements.
How to Trade at Legal Prediction Market Sites
It’s easy to trade at prediction market sites that are regulated by the CFTC. Here are the steps to take:
- Check our on-page banners for reputable prediction market sites in your location.
- Click the appropriate buttons to initiate the sign-up process.
- Follow the prompts and take the required steps to get signed up.
- Fund your account.
- Pick your preferred prediction market category/topic and start trading contracts.
However, we recommend checking out our guide on how to read market prices before you start trading event contracts.
Pros and Cons of Using Legal Prediction Markets
Here are the upsides and downsides of trading at prediction markets that are legal in the US:
Pros and Cons - Covers multiple categories
- May be available in all 50 US states
- Peer-to-peer-based pricing model
- Potential state restrictions
Conclusion – You Now Know Where Prediction Markets Are Legal
Prediction markets have recently risen in popularity across the US. That’s because they support the trading of event contracts on sports events and other real-world events. However, they run on a different model from traditional online sportsbooks and are largely seen as derivatives exchanges and not sports betting sites.
Prediction markets are regulated by the Commodity Futures Trading Commission (CFTC), so prediction markets are legal in the US. Since they’re regulated by the CFTC, which is a federal agency, they are available in all 50 US states.
However, Hawaii, Kentucky, New York, and Nevada may soon restrict or regulate the operation of prediction market sites within their jurisdictions. We’ll keep an eye on the situation and update this page if anything changes.
In the meantime, it’s legal to trade event contracts at prediction market sites. Check our on-page banners to see which sites are available and sign up if you’re interested in using their services.
Read More
Prediction Market Sites We Recommend
Are Prediction Markets Legal? FAQ
- 🧐 Are prediction market sites considered legal in the US?
US prediction market sites are regulated by the CFTC, which oversees the US financial derivatives market. As such, they’re considered legal in the US.
- 📍 Where are prediction markets legal in the US?
Since US prediction markets are regulated by the CFTC, they are legal according to US federal laws and are currently available in 50 US states. However, some US states are looking to change their legal status within their jurisdictions.
- 🚫 Why are prediction markets illegal in some US states?
Prediction market sites aren’t currently illegal in any US states, although the Hawaii state legislature recently passed a bill seeking to make them illegal within its jurisdiction. However, the bill hadn’t been signed into law at the time of writing.
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