Are Prediction Markets Legal? A 2026 Guide to the Legality of Market Forecasts

Prediction markets are quickly becoming popular in the United States, with many of these platforms opening their virtual doors. If you intend to use such platforms, it’s normal to pause and wonder: Are prediction markets legal in the US?

While we would love to give a yes-or-no answer, there’s a lot more to the legality of prediction sites and apps. You have to consider their legal standing on both the federal and state levels. We created this simple guide to break down the complex factors of how prediction markets operate in the state, so read on to learn more.

Quick facts about the legality of prediction markets

• Prediction markets are generally legal under the federal Commodity Futures Trading Commission (CFTC).
• While the CFTC approves prediction platforms, some states have challenged their legality.
• Individual prediction markets have limited their services in some states.

Are prediction markets legal in the United States?

Yes, on a federal level. When you answer the question, What is a prediction market, you will quickly understand that these platforms operate on a different framework compared to regular gambling sites. For starters, they do not support traditional betting but allow you to trade event contracts based on various outcomes. This is similar to how the stock market works, but this time the focus is on topics like sports, entertainment, politics, and climate conditions.

As a result, markets like Robinhood, Polymarket, and Kalshi are considered financial derivatives. They are regulated at the federal level by the Commodity Futures Trading Commission (CFTC). So, technically, they are permitted to offer services nationwide.

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Exploring the legality of prediction markets in the US state by state

Despite being licensed by the CFTC, some states dispute the regulation of prediction markets, especially those that offer contracts on sports events. They argue that such event contracts fall under state gambling laws and not just federal financial rules.

Now you might be wondering, what is event trading? Note, that it is not called “event betting”, but simply event contracts that allow you to predict the outcome of specific events.

So, while their CFTC licenses permit nationwide coverage, the legality of these trading platforms varies from state to state. Here is a complete list:

How the regulations surrounding prediction markets affect users

As a user, you have to be more cautious when choosing a platform. Even when you have a long list of legal prediction markets, you must be sure that the site or app is available in your state. For instance, when doing a comparison like Kalshi vs Polymarket, you must not only consider their features but also their legality in your location.

Another important thing to note is that regulations can change. So, even if prediction markets are currently legal in your state, you still have to be updated on the rules that surround them. Likewise, if these platforms are under litigation, there’s a chance that the state laws favor them and they become fully legal in your state.

Other limitations and availability factors you need to understand

If you want to use prediction markets, you need to factor in various things. For example, during our comparison of Kalshi vs Robinhood, we reviewed the terms and conditions to see if either had any limitations. Here are the most important factors we look for:

• Age requirement: Many sites have a minimum age limit of 18, though this can be higher, depending on the brand.
• Contract-specific availability: Some platforms limit the kind of event contracts they offer in specific states. This usually applies to sports event contracts.

Pros and cons of the legality of prediction markets in the US

Being considered financial derivatives is a perk, as it means US traders can generally access and use these platforms. There are a few other advantages, but there are downsides as well. Below is a summary of these pros and cons:

Pros and Cons

• Top prediction markets are regulated by the CFTC
• Such platforms operate in various US states
• Implementation of high-end security features to maintain CFTC license

• States are combating the legality of prediction markets
• Trading platforms limit their offerings in some states

Final thoughts: What is the future of prediction markets in the United States?

The future of prediction markets in the US is uncertain. While some states accept these platforms, some take a neutral stance, and others are on their way to completely ban them. Whatever the case, you do not want to be caught unaware when new laws emerge.

That is why you should stay in the loop and constantly learn about the rules that apply to prediction markets in your state. If they are legal in your jurisdiction and you meet the minimum age limit, you can easily sign up by clicking our page banners and predict outcomes of various events.

Are prediction markets legal: FAQs