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Are Prediction Markets Legal in the United States
Are Prediction Markets Legal in the United States
By
James Thompson,
Last Updated on 28.05.2026
Are prediction markets legal in the US? This is one of the many questions that we have received from our readers in recent times. Well, the truth is they are legal, but only regulated ones are allowed to operate
This means before any prediction market will be allowed to accept traders who are based in the US, they must be fully licensed by regulatory bodies like Commodities Futures Trading Commission (CFTC). In this guide, we’ll be zooming into the legality of these markets. But before then, we’ll briefly introduce prediction markets and how they operate. Follow for more!
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Must be 18 years or older and have a legal, U.S. residential address within the applicable state, D.C., or U.S. territories. Not available in AZ, IL, MA, MD, MI, MT, NJ, NV and OH.
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Table of Contents
- What are prediction markets and how do they work?
- Are prediction markets legal in the US?
- Pros and cons of the prediction markets’ legality in the US
- Who regulates the prediction markets in the US?
- A snapshot of the prediction markets’ legality in the US
- Learn More About Prediction Markets Through Our Detailed Guides
- Final thoughts on prediction markets legality in the US
- Prediction markets legality FAQs
What are prediction markets and how do they work?
Prediction markets are very easy to understand once you get a hang of them. As briefly mentioned in our Kalshi vs Polymarket guide, they are sites where you can trade on the outcome of real-world events using “yes” or “no” shares.
Instead of wagering against a bookmaker, as it is usually done on betting sites, you’re basically trading based on what you think will happen, interesting right? Most reputable prediction markets, especially our recommended ones, offer contracts tied to events like economy, sports, crypto prices, culture, and even music.
If you prefer crypto price movements, for instance, you’ll find questions like: Will Bitcoin beat the $160,000 mark before June of 2026? If you believe the event can happen, then you can buy the “yes” contract. If you believe it won’t happen, you can buy the “no” contract.
These shares usually cost between $0.1 to $0.99, depending on how likely people think the event will come to pass. If the outcome you invested into turns out to be correct, your share price will settle at $1.
That means if you purchase about 1000 shares, you’ll get a total of $1000. However, your profit will depend on the amount at which you bought the contract. If the contract was purchased at $0.5 per share, then you must have made a $500 profit.
Are prediction markets legal in the US?
Yes, prediction markets are legal in the US. However, this doesn’t mean any brand can just stand up to start operating without being licensed. As a regulated market, any company that wishes to give users the access to trade on real life events must go through appropriate bodies.
In the US, they must first register and get approval from the Commodity Futures Trading Commission before offering such services. Doing this ensures that the said brand follows strict rules around transparency, fairness, and user protection.
The absence of a license from the CFTC is one of the many reasons why some popular prediction markets are not available in the US.
Pros and cons of the prediction markets’ legality in the US
So far, here are some of the pros and cons of the prediction markets’ legality that we’ve noticed:
Pros and Cons
- Provide a safe trading environment
- Protects traders through strict compliance
- Builds trust in licensed brands
- Bureaucratic delays with license issuance
Who regulates the prediction markets in the US?
Like we said briefly above, prediction markets are licensed and regulated in the US by the Commodity Futures Trading Commission. In case you don’t know, this body is a federal regulatory agency that is responsible for overseeing derivative markets, including event-based contracts offered on prediction sites.
In case you are wondering what events-based contracts are, they are simple agreements where users trade based on whether a specific real-world event will happen or not. For example, a contract might ask: Will inflation drop below 3% this year?
As a trader, you can either choose a “yes” or “no” contract, depending on what you believe will happen. Back to the discussion about CFTC, the body ensures that prediction markets operate fairly while also following strict rules.
This includes checking that the brands are transparent in their pricing, protecting user funds, and preventing fraud or manipulation.
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Must be 18 years or older and have a legal, U.S. residential address within the applicable state, D.C., or U.S. territories. Not available in AZ, IL, MA, MD, MI, MT, NJ, NV and OH.
A snapshot of the prediction markets’ legality in the US
Before we round up, here’s a table summarizing all that we’ve discussed so far:
| Are prediction markets legal? | Yes, but regulated |
| Regulator | Commodity Futures Trading Commission (CFTC) |
| Requirements | Markets must be licensed to operate |
| Purpose of regulation | To protect traders while ensuring fairness |
Learn More About Prediction Markets Through Our Detailed Guides
Need more context before comparing prediction market sites? The prediction market guides below explain how they work, how event contracts are structured, how to read market prices, and how major platforms compare. Use them to understand the basics before choosing where to trade.
| Prediction Market Guides | Check the Guide Here |
|---|---|
| What Is a Prediction Market | What Is a Prediction Market and How It Works |
| Prediction Markets in the US? | Are Prediction Markets Legal in the US? |
| Kalshi vs Polymarket | Kalshi vs Polymarket: Which Prediction Market Is Best For You |
| Kalshi vs Robinhood | Kalshi vs Robinhood: Which Prediction Market Is Best For You |
| Event Contracts | What Are Event Contracts and How They Work |
| Prediction Markets vs Sportsbooks | Prediction Markets vs Sportsbooks: Differences Explained |
| How to Read Market Prices | How to Read Market Prices as Probabilities |
| The Hidden Costs of Event Trading | The Hidden Costs of Event Trading Explained |
Final thoughts on prediction markets legality in the US
In conclusion, prediction markets are legally allowed to operate in the US. This means if you’re at least 18 years old, you can sign up for an account on your preferred site to start trading. However, to ensure your safety and protection, make sure to only trade on markets that are licensed and regulated by the CFTC.
Or better still, you can sign up for an account with any of the brands listed on banners of this page. They are fast and easy to use, so you won’t run into any issues. Once ready, you’ll find their registration links plastered on the banners of this page.
The most reliable prediction sites in June
Must be 18 years or older and have a legal, U.S. residential address within the applicable state, D.C., or U.S. territories. Not available in AZ, IL, MA, MD, MI, MT, NJ, NV and OH.
