Are Prediction Markets Legal in the US? The 2026 Answer

Are prediction markets legal in the US? Yes: prediction markets are legal when they run as exchanges registered with the Commodity Futures Trading Commission (CFTC), and Kalshi and Polymarket US both do. The part that is not settled is sports contracts. Several states call them sports betting without a license, three federal appeals courts have split on who is right, and New Jersey has asked the Supreme Court to decide.

So the honest answer to "is Kalshi legal" has two halves. The exchange is legal. Whether you can trade a sports contract on it depends on your state, and the map is changing month to month.

Please note: This is general information as of October 23, 2026, not legal advice, and it can change with any court ruling. Each platform confirms your eligibility with its own location check before you trade, so treat the app as the final word for where you are.

Try It: Your State, Your Venues

Your state decides which legal venues you get for a bet on a game: a state licensed sportsbook, a CFTC regulated exchange like Kalshi, both, or neither. Flip the two switches to match your state, then drag the contract price and edit the sportsbook line to see which open venue asks you to be right less often.

At the defaults, a 50 cent Kalshi contract costs 51.75 cents once the 1.75 cent taker fee is added, a break even of 51.75% (about −107). A −110 sportsbook line breaks even at 52.38%, so the contract is the cheaper price by 0.63 points. Move the contract to 51 cents and the order flips: the all in cost becomes 52.75 cents, and the sportsbook wins. These are illustrative prices, and any bet can still win or lose.

Now switch off the sportsbook, the position of a bettor in California or Texas, where no state sportsbook is licensed. The exchange is the only legal venue left. Switch off Kalshi too, the position in Nevada today, and nothing is left. That is why the legal fight matters to you: it decides which column of that widget exists in your state.

The Short Answer

Here is where things stand as of October 2026:

1. The exchanges are federally legal. Kalshi is a designated contract market under the CFTC, and Polymarket serves US users through Polymarket US, which runs on a CFTC registered exchange. Their markets on economics, weather, and most other events are not what the lawsuits target.
2. Sports contracts are contested. States argue a contract that pays on who wins a game is a sports bet, which needs a state gaming license. The exchanges argue it is a federally regulated swap that states cannot touch.
3. Courts are split. One federal appeals court has sided with Kalshi, two have sided with the states, and a fourth has not ruled.
4. A few states have forced a block. Nevada and Michigan have court orders that keep Kalshi's sports contracts away from users located there, and a Massachusetts court has ordered the same.
5. The Supreme Court has been asked to settle it. New Jersey's petition is pending, with Kalshi's response due November 9, 2026.

Is Kalshi Legal?

Kalshi is legal as an exchange. The CFTC designated Kalshi a contract market in 2020, the same federal status that lets futures exchanges list contracts on interest rates or crop prices. Its contracts on inflation, rates, and the weather have never been the subject of the state fights.

Sports are the exception. Kalshi began listing sports contracts in January 2025, and sports quickly became most of its volume. That is when state gaming regulators started sending cease and desist letters, and Kalshi started suing them in federal court to keep trading.

Two practical rules follow:

• Kalshi decides by your location, not your address. After Nevada regulators showed that address based blocks could be dodged, Kalshi agreed to a third party geofence there. Expect the location check to read where your phone is.
• The minimum age is 18. Kalshi lets you trade from 18, while state licensed sportsbooks require 21 in most states. That gap is part of why states and sports leagues have pushed back.

For the money side of Kalshi, what its fee costs you against a sportsbook's vig, see Kalshi vs Sportsbook.

Is Polymarket Legal in the US?

Polymarket is legal in the US through Polymarket US. Polymarket's main exchange runs on a blockchain and served users outside the US for years. In 2025 Polymarket bought QCX, a CFTC registered exchange and clearinghouse, and launched Polymarket US as a separate app for American users.

That makes Polymarket US the same kind of venue as Kalshi in the eyes of federal law, and it puts it in the same state fights. New York's attorney general and Ohio regulators have both acted against Polymarket US, and it has sued Ohio in response. Its fees and market menu differ from the international exchange, so compare the two in Polymarket vs Kalshi before you trade.

Why Two Regulators Claim the Same Contract

The whole dispute turns on one question: is a sports event contract a swap or a bet?

• If it is a swap, it falls under the Commodity Exchange Act, the federal law that gives the CFTC exclusive jurisdiction over swaps traded on a registered exchange. Federal law would then preempt, or override, state gambling laws for those contracts.
• If it is a bet, it is sports wagering, and every state gets to decide whether to license it, tax it, or ban it, the same way it treats DraftKings or FanDuel.

The exchanges point to the swap definition in the statute, which covers payments tied to whether an event happens. The states point to the CFTC's own Regulation 40.11, which bars registered exchanges from listing contracts on gaming, and argue that a contract on a game's winner is exactly that.

The Ninth Circuit drew the line this way: whether a game is played is an occurrence, but who wins it is an outcome, and a wager on an outcome is a bet. It also warned that Kalshi's reading had no limiting principle, since almost anything can be called an event.

That is the why. Now the court by court record.

The Circuit Split, Court by Court

Federal appeals courts have now ruled three times on Kalshi's sports contracts, and they do not agree.

When federal appeals courts disagree on what a federal law means, the Supreme Court is the usual tiebreaker. Kalshi has asked the full Ninth and Sixth Circuits to rehear their cases, which can delay but not erase those rulings.

The federal government is on Kalshi's side of the argument. The CFTC has sued or intervened against several states, including Arizona, Connecticut, Kentucky, New Mexico, and New York, arguing its jurisdiction is exclusive. In Arizona a federal judge blocked the state's enforcement in May 2026.

Where Sports Contracts Are Restricted

This is the part that moves fastest, so read it as a snapshot as of October 23, 2026, and let the app's location check have the last word.

• Nevada. A May 2026 injunction barred Kalshi's sports, election, and entertainment contracts. In July 2026 Kalshi agreed to a third party geofence, due by August 12, to keep anyone located in Nevada out of them.
• Michigan. A state court order in September 2026 restricts Kalshi's sports contracts for Michigan users, and Robinhood and Coinbase agreed to close Michigan users' sports positions in early October.
• Massachusetts. A state court granted a preliminary injunction against Kalshi's sports contracts on January 20, 2026. Kalshi's appeal to the state's highest court was argued in May 2026 and has not been decided.
• Ohio and Tennessee. After the Sixth Circuit ruling, both states are free to enforce their gambling laws against Kalshi. Ohio has also sent cease and desist letters to other operators.
• States still in court. Maryland, New York, Connecticut, Kentucky, Illinois, Missouri, Utah, and others have lawsuits or enforcement actions pending, with sports contracts still trading in most of them while the cases run.

Not every state is fighting. Montana settled with Kalshi in September 2026 and agreed not to enforce against its event contracts without 30 days' notice. Minnesota passed a law banning prediction markets in May 2026, and a federal judge blocked it before it took effect.

Notice who every one of these actions names: the platform, not the trader. The orders tell exchanges and brokers to stop offering contracts in a state, and the practical risk for you is a market that disappears or a position you are asked to close.

The Supreme Court Question

The case to watch is Flaherty v. KalshiEX, No. 26-299. New Jersey filed it on September 2, 2026, asking the Supreme Court to reverse the Third Circuit. Robinhood has filed its own petition from the Ninth Circuit's Nevada ruling.

The NFL, the American Gaming Association, state gaming regulators, and more than 100 tribes have filed briefs urging the Court to take the case. Kalshi's response is due November 9, 2026. The Court takes only a small share of petitions, but a clear split between circuits is the classic reason it does.

There are two ways it can end:

• A ruling for the exchanges would make sports contracts federal products nationwide. States could not license, tax, or ban them, and only the CFTC could set the rules.
• A ruling for the states would turn sports contracts into sports betting in the eyes of the law. Each state could license them, tax them like sportsbooks, or ban them, and the map would look much more like today's sportsbook map.

A decision on the merits, if the Court takes the case, would most likely come in 2027.

What Legal Status Changes for You

Here's the thing: legal status is not only a yes or no. The kind of venue you are using changes the rules you trade under.

Two of those rows are why bettors care about the legal fight. An exchange has no house to limit you for winning, since the other side of your trade is another trader. And an exchange can be the only legal venue at all in states with no sportsbook, such as California and Texas. Our guide to sports event contracts covers how those game contracts trade, settle, and sell before the final.

The cost row is what the widget above measures. On Kalshi the fee is largest at 50 cents and shrinks toward both ends, so a contract near a coin flip can be cheaper than a −110 line by a fraction of a point, and a heavier favorite usually is. Convert any contract to odds with the prediction market converter, or read how Kalshi prices convert to American odds.

How to Check Your State

You can confirm your own state in a few minutes:

1. Open the app where you are. Kalshi and Polymarket US both run a location check before you trade, and a market that is off in your state will not let you enter.
2. Check your state's gaming regulator. Regulators post cease and desist orders and settlements on their own sites.
3. Watch for the November filings. Kalshi's Supreme Court response is due November 9, 2026, and the Fourth Circuit's Maryland ruling could land any week.

If you also play pick'em apps, the same patchwork applies for a different reason. Where Is PrizePicks Legal? covers that map.

Using Prediction Markets With SmartStake

If prediction markets are open in your state, SmartStake helps you read them like a sharp. Insiders tracks qualified wallets on Polymarket, traders with at least 200 sports markets and a positive directional return, and surfaces their positions as picks you can take into your Bet Tracker. A wallet's past record is a data point for your own decision, not a promise about its next pick. It is part of Premium, which comes with a 5-day trial. See how to use Insiders for a walk through.

For the fundamentals of trading event contracts, start with Prediction Market Betting Explained. For fees and pricing on Polymarket specifically, the Polymarket odds converter guide shows the math.

FAQ

Are prediction markets legal in the US?

Yes. Prediction markets are legal in the US when they run as exchanges registered with the Commodity Futures Trading Commission (CFTC), the federal regulator for futures and swaps. Kalshi and Polymarket US both operate that way. The contested part is sports contracts: several states say those are sports betting that needs a state license, federal appeals courts have split on the question, and a few states, such as Nevada and Michigan, have won orders that block them. This is general information, not legal advice.

Is Kalshi legal?

Kalshi is legal as a federally regulated exchange. The CFTC designated it a contract market in 2020, and it has offered sports contracts since January 2025. Its non sports markets are not the fight. Its sports contracts are: as of October 2026 courts have blocked them in Nevada and Michigan, a Massachusetts court has ordered the same, and the Supreme Court has been asked to settle whether states can regulate them. Kalshi checks your location before you trade, so its app is the final word for where you are.

Is Polymarket legal in the US?

Polymarket is legal in the US through Polymarket US, a separate app that runs on QCX, a CFTC registered exchange Polymarket bought in 2025. Polymarket's main international exchange is not the US product. Like Kalshi, Polymarket US faces state actions over its sports contracts, so what you can trade depends on where you are, and the app's own location check decides it.

Are prediction markets gambling?

That is the legal question the courts are deciding. The exchanges say a sports event contract is a swap, a federally regulated financial product, which would put it under the CFTC alone. States say a contract that pays on who wins a game is a sports bet under state law. The Third Circuit sided with Kalshi in April 2026. The Ninth and Sixth Circuits sided with the states in August and September 2026. For your own bankroll, a sports contract carries the same risk as a bet: you can lose what you stake.

Why is Kalshi not available in my state?

Kalshi turns off sports contracts in a state when a court orders it to, or when it settles with the state. Nevada and Michigan are blocked by court orders, and Massachusetts has an injunction from its state court. Its economics and weather markets usually stay open where sports are off. Kalshi has moved to location checks, so a block can follow where you are, not only where you live.

What happens if the Supreme Court takes the Kalshi case?

New Jersey asked the Supreme Court in September 2026 to review the Third Circuit's ruling for Kalshi, in Flaherty v. KalshiEX, No. 26-299. Kalshi's response is due November 9, 2026. If the Court takes the case and rules for Kalshi, federal law would shield sports contracts from state gambling laws nationwide. If it rules for the states, each state could license, tax, or ban them. Until then, the answer stays state by state.

Sources

The court record above is drawn from the Supreme Court docket for No. 26-299¹, the DeFi Rate prediction market lawsuit tracker², and reporting on each ruling³⁴⁵.

Footnotes

1. Supreme Court of the United States, docket No. 26-299, Flaherty v. KalshiEX, LLC, read October 23, 2026. ↩

2. DeFi Rate, "Prediction Market Lawsuit Tracker," read October 23, 2026. ↩

3. Covers, "Ninth Circuit Rules Against Sports Event Contracts, Allowing Nevada to Enforce Laws," August 28, 2026. ↩

4. CNBC, "Appeals court rules that states can regulate Kalshi's sports prediction markets," September 25, 2026. ↩

5. KOLO TV, "Kalshi agrees to stop operating in Nevada," July 28, 2026. ↩