Prediction markets run by CFTC-regulated exchanges are legal at the federal level and available to adults in most US states. A handful of states have objected — especially over sports markets — and the regulatory picture is changing month to month.
How they’re regulated
In the United States, prediction-market contracts are regulated as event contracts — a type of derivative — by the Commodity Futures Trading Commission (CFTC). A platform that operates as a CFTC-designated contract market can legally offer these contracts to eligible US traders. This framework began in earnest in 2021, when Kalshi became the first platform to receive a federal licence, and expanded after a 2024 court ruling cleared the way for regulated election markets.
The state-by-state picture
Because this is federal derivatives regulation rather than state gambling law, the leading platforms advertise availability across the country. In practice, several states have pushed back — Nevada and New York among them — and the position on sports event contracts in particular is contested in a number of jurisdictions. The result is a genuinely fluid map: a platform or market that is available in one state may be restricted in another, and that can change quickly.
The practical takeaway is simple: always confirm current availability with the platform itself for your state before funding an account. See our state-by-state availability guide for the current position where you live. Our platform reviews note availability, but the platform is always the authoritative source.
Key rulings & the legal fight
Three threads explain how the law reached this point and where it is heading. For the mechanics of federal oversight, see how the CFTC regulates prediction markets. For the case that opened the door, read the 2024 election markets ruling in Kalshi v. CFTC. And for the fight now playing out over sports, see the sports event contracts legal battle and the federal-preemption question at its centre.
Is it gambling or trading?
At the federal level, regulated event contracts are treated as derivatives, not gambling. Whether they amount to gambling in substance is a live debate, and some states view sports event contracts as close enough to sports betting to warrant their own rules. If you want a fuller discussion, see our explainer on what prediction markets are.
What about tax?
Any gains you make may be taxable, and because these are regulated derivatives the reporting can differ from ordinary gambling winnings. We are not tax advisers — speak to a qualified professional about your own circumstances.
Who can trade
Prediction markets are for adults — generally 18 or over — and you are responsible for ensuring that using a given platform is lawful where you live. If you choose to trade, please do so responsibly; see our responsible trading page.
This page is general information current as of June 2026, not legal or tax advice. Regulation is changing rapidly; verify the current position before acting.
Frequently asked questions
Are prediction markets legal in the US?
Yes — prediction markets offered by CFTC-regulated exchanges operate legally at the federal level as event-contract (derivatives) trading, and are available to adults in most US states. Some states have pushed back, particularly on sports markets, so availability varies and is still evolving.
Is trading event contracts the same as gambling?
At the federal level, event contracts on regulated exchanges are treated as derivatives rather than gambling. Whether they are ‘really’ gambling is debated, and some states take a different view — especially on sports.
Which states restrict prediction markets?
The major platforms advertise nationwide availability under CFTC regulation, but have faced pushback in states such as Nevada and New York, and sports markets in particular remain contested in several jurisdictions. Always check current availability with the platform for your state.
Do I pay tax on prediction-market winnings?
Gains may be taxable, and reporting can differ from ordinary gambling winnings because these are regulated derivatives. This is not tax advice — consult a qualified tax professional about your situation.