# Are prediction markets legal in the US?

> Yes — prediction markets that list event contracts on a CFTC-regulated exchange are legal under federal law and available in most states. Sports contracts are the exception: as of September 30, 2026, federal appeals courts are split on whether states can ban them, several states block them, and the Supreme Court has been asked to decide.

- URL: https://safebet.ai/us/prediction-markets/are-prediction-markets-legal/
- Markdown version: https://safebet.ai/us/prediction-markets/are-prediction-markets-legal/index.html.md
- Last updated: 2026-09-30 (re-checked when an operator changes its terms or a regulator or court acts)
- Author: SafeBet.ai Research Team (SafeBet.ai)
- Editorial policy and advertiser disclosure: https://safebet.ai/editorial-policy/

## Key takeaways

- Event contracts on CFTC-regulated exchanges (designated contract markets) are legal under federal law; Kalshi, Polymarket US, Crypto.com's OG and ForecastEx all operate that way.
- States argue that sports event contracts are unlicensed sports betting. The Third Circuit disagreed (New Jersey, April 2026); the Ninth and Sixth Circuits agreed with the states (August and September 2026).
- Three petitions asking the Supreme Court to resolve the split were pending on September 30, 2026; none had been granted.
- The CFTC is backing the platforms: it has sued or joined suits against nine states and proposed a rule in June 2026 that would generally allow sports-outcome contracts.
- In practice, sports contracts are switched off on some platforms in Nevada, Michigan, Washington and Maryland, and more states are moving to enforce.

## The short answer

Prediction markets are legal in the US when they list event contracts on an exchange regulated by the Commodity Futures Trading Commission (CFTC). Every platform in our [ranking of the best US prediction markets](https://safebet.ai/us/prediction-markets/) works that way, and all of them are available in most states.

The open question is sports. Many states say that a contract paying out on a game's result is sports betting, which needs a state license. The platforms and the CFTC say federal law puts these contracts under the CFTC's exclusive control. As of September 30, 2026, the federal appeals courts disagree, and the Supreme Court has been asked to settle it. Until then, whether you can trade sports contracts depends on your state and the platform.

> This guide describes the legal situation as of September 30, 2026. It changes almost weekly, so check the latest court decisions and your platform's state list before you trade. It is general information, not legal advice.

## How federal law regulates prediction markets

Event contracts are regulated as derivatives under the Commodity Exchange Act. A platform that lists them for US customers needs a CFTC designation as a **designated contract market (DCM)**, and trades are guaranteed by a CFTC-registered clearinghouse, a **derivatives clearing organization (DCO)**. Brokers that hold customer money, such as Robinhood, register as **futures commission merchants (FCMs)**.

- **Kalshi** — KalshiEX LLC has been a DCM since November 2020; its clearinghouse, Kalshi Klear, was registered in August 2024.
- **Polymarket US** — QCX LLC was designated in July 2025, the year Polymarket bought the exchange; its clearinghouse is QC Clearing LLC.
- **Crypto.com's OG** — North American Derivatives Exchange, Inc. (NADEX) is both a DCM and a DCO.
- **Interactive Brokers** — ForecastEx LLC was designated a DCM and registered as a DCO in June 2024.
- **Robinhood** — Robinhood Derivatives, LLC is an FCM that routes orders to exchanges including Kalshi and ForecastEx.

Exchanges don't need the CFTC's permission for each new contract. Under the **self-certification** process, an exchange certifies that a contract complies with the law and can list it the next business day. The CFTC can then review it. Under a special rule added by the Dodd-Frank Act and CFTC Rule 40.11, the agency may block contracts that involve terrorism, assassination, war, **gaming**, or activity that is unlawful under state or federal law, if it finds them contrary to the public interest.

### The election-contract case

In 2023 the CFTC blocked Kalshi's contracts on which party would control Congress, calling them gaming. Kalshi sued and won: in September 2024 a federal judge in Washington, D.C., ruled that the contracts involved elections, not gaming. The CFTC appealed but, under new leadership, dropped the appeal in May 2025. That case opened the door to election markets, which Kalshi and Polymarket US now list.

## Why sports contracts are contested

Sports contracts arrived in December 2024, when Crypto.com began listing them, and Kalshi followed in January 2025. They quickly became the bulk of the business — the Ninth Circuit noted that more than 90% of Kalshi's trades in 2025 were sports-related.

States with licensed sportsbooks objected. Their argument: a contract that pays out if a team wins is a sports bet, whatever it's called, and operating without a state license breaks state gambling law. The platforms argue that the contracts are "swaps" traded on federally regulated exchanges, so federal law preempts state gambling laws. The CFTC agrees with the platforms.

## The court split

| Court | Case | Date | Outcome |
|---|---|---|---|
| Third Circuit (New Jersey) | KalshiEX v. Flaherty | April 6, 2026 | **For Kalshi**, 2–1: sports contracts are swaps on a DCM, and federal law preempts New Jersey's law |
| Ninth Circuit (Nevada) | KalshiEX v. Assad | August 28, 2026 | **For Nevada**: sports contracts are likely not swaps, and federal law likely does not preempt Nevada gaming law |
| Sixth Circuit (Ohio, Tennessee) | Kalshi appeals | September 25, 2026 | **For the states**, unanimously: Ohio may enforce its law, and Kalshi's Tennessee injunction was vacated |
| Fourth Circuit (Maryland) | KalshiEX v. Martin | Argued May 7, 2026 | Pending |
| Tenth Circuit (Utah) | KalshiEX v. Cox | September 9, 2026 | Kalshi denied an injunction pending appeal, so Utah may enforce |

When federal appeals courts disagree like this, the Supreme Court often steps in. Kalshi has also asked the full Ninth Circuit to rehear the Nevada case.

## The Supreme Court petitions

Three petitions were waiting at the Supreme Court on September 30, 2026:

- **No. 26-299, Flaherty v. KalshiEX** — New Jersey's appeal of its Third Circuit loss. Kalshi's response is due November 9, 2026.
- **No. 26-338, Robinhood Derivatives v. Dreitzer** — Robinhood's appeal of its Ninth Circuit loss in Nevada.
- **No. 26-344, North American Derivatives Exchange v. Nevada** — Crypto.com's exchange appealing its own Nevada loss.

None had been granted. With New Jersey's response not due until November, a decision on whether to hear the case is unlikely before late 2026, and if the Court takes it, a ruling would probably come by mid-2027.

## What the CFTC is doing

Since Chairman Michael Selig was sworn in in December 2025, the CFTC has sided firmly with the platforms:

- **Lawsuits against states.** Together with the Justice Department, the CFTC has sued or moved to intervene against nine states — Arizona, Connecticut, Illinois, Kentucky, Minnesota, New Mexico, New York, Rhode Island and Wisconsin — arguing federal law preempts their gambling laws.
- **Emergency orders.** In July 2026 it stopped Kalshi from cancelling Michigan residents' trades after a state court order, and in August 2026 it used emergency powers to direct Kalshi to keep operating despite New York's lawsuit.
- **A proposed rule.** In June 2026 the CFTC proposed that sports-outcome contracts would generally *not* be contrary to the public interest, while contracts on injuries, officiating, single plays, fights and pre-college sports likely would be.
- **Market integrity.** It has brought insider-trading cases involving event contracts and warned exchanges about "mention" markets and sportsbook-style odds displays.

## Where sports contracts are restricted right now

As of September 30, 2026, these are the main restrictions we found. They change often.

- **Nevada:** Kalshi (sports, election and entertainment contracts) and Polymarket US are barred by state-court injunctions; Robinhood stopped new sports contracts in December 2025.
- **Michigan:** a September 1, 2026 court order bars Kalshi's sports contracts; Robinhood and Coinbase agreed to wind down sports contracts in September 2026.
- **Washington:** a state court ordered Kalshi to block sports, politics, entertainment, culture, technology and science contracts (commodities, climate, economics and finance markets remain); Robinhood stood down on sports.
- **Maryland:** Robinhood blocks sports event contracts for Maryland residents (its help pages suggest possibly all event contracts); Kalshi's case is before the Fourth Circuit.
- **Ohio, Tennessee and Utah:** after the September rulings, these states may enforce their laws against Kalshi.
- **Massachusetts:** a court order against Kalshi's sports contracts is on hold while the state's highest court decides the appeal.
- **Connecticut, Missouri and New York:** issued cease-and-desist orders or lawsuits against several platforms in 2026; the cases are ongoing.

Platform by platform: Kalshi blocks sports in Nevada, Michigan and Washington; Robinhood doesn't offer sports contracts in Maryland, Nevada, Michigan or Washington; Polymarket US says it is unavailable only in Nevada; OG says it is available in all states with some contracts restricted; and Interactive Brokers' ForecastEx lists no sports contracts at all. Our [ranking](https://safebet.ai/us/prediction-markets/) keeps an up-to-date availability table.

## What about Congress?

No federal law specific to prediction markets had passed as of September 2026. Bills introduced in 2026 range from banning sports and casino-style contracts on CFTC exchanges, to barring members of Congress and officials from trading event contracts, to moving oversight to the states with a 21+ age limit. All were still in committee at last action.

## What this means for you

- **Use a CFTC-regulated platform.** Offshore and crypto-only sites that aren't registered with the CFTC offer none of the same protections.
- **Trade where you are allowed to.** Platforms check your location. Using a VPN to reach a blocked market breaks the terms and can cost you your account and your winnings.
- **Expect changes.** A court ruling can switch off sports contracts in your state with little notice. Keep that in mind before opening long-dated positions.
- **Keep records for taxes.** Profits are taxable, and the rules for event contracts are still unsettled — see our [guide to gambling and prediction market taxes](https://safebet.ai/us/guides/gambling-taxes/).
- **Mind the age limits.** Most platforms require you to be 18; Interactive Brokers requires 21.

## The bottom line

Prediction markets are a legal, federally regulated product in the US, but sports contracts sit in a legal gray zone that the Supreme Court may have to resolve. If you want to trade, choose a CFTC-regulated platform that is available in your state — our [ranking of the best prediction markets in the US](https://safebet.ai/us/prediction-markets/) compares them — and learn [how prediction markets work](https://safebet.ai/us/prediction-markets/how-prediction-markets-work/) before you put money in.

## Frequently asked questions

### Is Kalshi legal in the US?

Yes. Kalshi's exchange, KalshiEX LLC, has been a CFTC-designated contract market since 2020, and it is available in most states. As of September 30, 2026, court orders block its sports contracts in Nevada, Michigan and Washington, and several other states are challenging them. See our [Kalshi review](https://safebet.ai/us/prediction-markets/kalshi-review/).

### Is Polymarket legal in the US?

Yes, through Polymarket US, which runs on QCX LLC — a CFTC-designated contract market since July 2025. Polymarket says it is available in every state except Nevada, where a state court has barred it. The international polymarket.com does not let US users open new positions.

### Are sports event contracts legal?

It depends on where you are, and the question is still being decided in court. Federal appeals courts are split, the Supreme Court has been asked to rule, and several states block sports contracts while others haven't acted. The platforms turn off sports contracts in states where a court orders it.

### Can I use a prediction market in a state where it's restricted?

No. Platforms use geolocation to block restricted contracts in restricted states, and using a VPN or false information to get around that breaks their terms and can lead to a closed account and forfeited winnings.

### What happens to my open positions if my state bans sports contracts?

It varies. In Michigan, Robinhood stopped new sports contracts on September 9, 2026 and required open positions to be closed by October 9, and Coinbase agreed to close Michigan positions by October 10. When a state court ordered Kalshi to cancel Michigan trades, the CFTC ordered Kalshi to honor them instead.

### Is a prediction market the same as gambling?

Legally, that's the heart of the dispute. Federal regulators treat event contracts as derivatives traded on regulated exchanges; many states treat sports contracts as betting. Either way, you can lose the money you put in, and profits are taxable.

## Sources

1. [CFTC Issues Proposed Rule Regarding Prediction Markets (LSB11441)](https://www.congress.gov/crs_external_products/LSB/PDF/LSB11441/LSB11441.2.pdf) — Congressional Research Service, 2026-06-24
2. [17 CFR 40.11 — Review of event contracts based upon certain excluded commodities](https://www.law.cornell.edu/cfr/text/17/40.11) — Cornell Legal Information Institute, accessed 2026-09-30
3. [KalshiEX LLC v. Flaherty, No. 25-1922 (3d Cir.)](https://www2.ca3.uscourts.gov/opinarch/251922p.pdf) — U.S. Court of Appeals for the Third Circuit, 2026-04-06
4. [KalshiEX LLC v. Assad, No. 25-7516 (9th Cir.)](https://cdn.ca9.uscourts.gov/datastore/opinions/2026/08/28/25-7516.pdf) — U.S. Court of Appeals for the Ninth Circuit, 2026-08-28
5. [Kalshi loses appeal over Ohio and Tennessee sports betting laws, widening circuit split](https://www.theblock.co/news/regulation/2026-09-26-kalshi-loses-appeal-over-ohio-and-tennessee-sports-betting-laws-widening-circuit-split-416937) — The Block, 2026-09-26
6. [Docket No. 26-299, Flaherty v. KalshiEX, LLC](https://www.supremecourt.gov/docket/docketfiles/html/public/26-299.html) — Supreme Court of the United States, accessed 2026-09-30
7. [CFTC and DOJ sue Arizona, Connecticut and Illinois (Press Release 9206-26)](https://www.cftc.gov/PressRoom/PressReleases/9206-26) — Commodity Futures Trading Commission, 2026-04-02
8. [Prediction Markets; Public Interest Determinations — proposed rule (Press Release 9249-26)](https://www.cftc.gov/PressRoom/PressReleases/9249-26) — Commodity Futures Trading Commission, 2026-06-10
9. [CFTC emergency order directing Kalshi to keep operating (Press Release 9281-26)](https://www.cftc.gov/PressRoom/PressReleases/9281-26) — Commodity Futures Trading Commission, 2026-08-11
10. [Governor Lamont announces new actions against illegal prediction markets offering sports wagers](https://portal.ct.gov/governor/news/press-releases/2026/09-2026/governor-lamont-announces-new-actions-against-illegal-prediction-markets-offering-sports-wagers) — Office of the Governor of Connecticut, 2026-09-10
11. [Prediction Markets Legislation in the 119th Congress (IF13207)](https://www.congress.gov/crs_external_products/IF/PDF/IF13207/IF13207.1.pdf) — Congressional Research Service, 2026-04-21
12. [Prediction Market Litigation Tracker](https://defirate.com/prediction-markets/legal/) — DeFi Rate, updated 2026-09-22