Are prediction markets legal in the US? This is a common question that many US traders ask today. To give a direct answer: Yes, these platforms are completely legal. They are licensed by the Commodity Futures Trading Commission (CFTC).
Thus, you can safely create an account and trade contracts on real-world events. But there’s still so much to unpack about these prediction market sites’ legal status. That’s why we’ve prepared this article to bring clarity about prediction market sites. Also, we’ll consider the types of real-world event contracts you can trade. Without further ado, let’s get started.
The best prediction market platforms in 2026
- Key takeaways about prediction markets in the US
- What is a prediction market, and how does it work?
- Are prediction markets legal in the US?
- Federal law vs state law: Should you be concerned?
- What events can you trade on legal prediction markets in the US?
- Key factors to note before trading at prediction markets in the US
- Pros and cons of prediction markets in the USA
- Register and trade event contracts at any of our recommended prediction market sites today
- FAQs on prediction markets
Key takeaways about prediction markets in the US
- Prediction markets are legal at the federal level in the US, as long as they hold a Designated Contract Market (DCM) license under CFTC regulations.
- These platforms let you trade the outcome of future events by trading contracts, similar to the stock market
- Event contract prices range from $0.01 to $0.99; the price settles at $1 if the predicted outcome holds, and at $0 otherwise.
What is a prediction market, and how does it work?
It’s a platform that lets you trade on the outcome of future events by buying or selling binary contracts (Yes or No). As you can see in a Polymarket review, you can trade event contracts on sports, politics, economics, crypto, culture, and climate.
The contract prices range from $0.01 to $0.99, set by traders based on the likelihood of an event occurring. In essence, the higher the price, the more likely traders think such an event will happen.
For example, you may find an event contract such as “Will Bitcoin reach $100,000 by June 2026?”. Let’s say “Yes” is priced at $0.35, and “No” is at $0.65. In this case, the market thinks that there’s roughly a 35% chance of that outcome happening (or a 65% chance it doesn’t).
So, if you believe that Bitcoin will reach this price, you can go ahead to purchase a Yes position for, let’s say, $100.
That means you’ll receive ~286 shares ($100/0.35). Once the event ends and you’re correct, the contract settles at $1. That means you’ll get $286 (286 x $1), a profit of $186. But if you’re wrong, you lose your $100.
Are prediction markets legal in the US?
Yes, they are. In the US, all prediction markets are licensed by the Commodity Futures Trading Commission (CFTC), the same regulatory body that oversees options, derivatives, and commodity futures markets.
Also, any prediction market that wants to operate legally in the US must be a Designated Contract Market (DCM). That was the case with the first platform to receive this stamp of approval, Kalshi. If you check any Kalshi review, you’ll know that it became the first CFTC-regulated prediction market in the US in November 2020.
Other brands, such as Polymarket and Robinhood, have also received their licensing from the CFTC and continue to operate in the country.
Federal law vs state law: Should you be concerned?
It’s pretty easy to argue that since prediction trading markets like Kalshi, Polymarket, and Robinhood are regulated at the federal level, each state should follow suit. Well, that’s not the case right now.
Many state gaming regulators, such as Utah, Nevada, New Jersey, Maryland, and Massachusetts, argued that event contracts are the same as online sportsbooks and require state-level licensing. Despite the back-and-forth, one fact stands: federal law supersedes state law. This is why if you ask, Is Kalshi legit? The answer would be a sure yes. And additionally, sports trading is completely legal.
Kalshi, as well as others, is classed as DCM. As such, they answer only to federal regulators, which makes them legal across the United States.
Despite the legal standings of these platforms, it doesn’t mean you’re in the clear yet. If you reside in a region that’s actively pushing against prediction markets, chances are you won’t have access to certain event contracts, especially sports.
Still, that doesn’t make prediction platforms illegal. You can enjoy trading in other events involving politics, culture, crypto, science & tech, and other available categories.
What events can you trade on legal prediction markets in the US?
When you sign up at a legal prediction market in the US, you can trade contracts on various real-world events. We have prepared a table of sample events you can buy or sell on these platforms.
| Real-world events | Description | Contract example |
|---|---|---|
| Sports events | Trade contracts on major and niche sporting events, as well as individual player performances | Will the USA win the 2026 FIFA World Cup? |
| Economy | Buy and sell contracts predicting key economic indicators, such as interest rate decisions, inflation figures, and jobs reports. | Will there be a recession this year? |
| Politics | Trade election and policy contracts tied to domestic and global political events, from vote outcomes to legislative decisions. | Will the US-Iran nuclear deal happen before July 2026? |
| Culture | Speculate on pop culture and entertainment outcomes, including award shows and box office results. | Will Michael Jordan win the 2026 Oscars’ Best Actor? |
| Cryptocurrency | Predict the price movement of major cryptocurrencies, taking a position on whether an asset will close above or below a set threshold. | Will Bitcoin close above $100,000 by the end of June 2026? |
| Climate | Trade contracts on measurable weather and climate outcomes, such as seasonal temperatures and rainfall levels | Will Chicago’s highest temperature be above 57° today? |
And depending on the liquidity and market volume, you can keep buying or selling any of these aforementioned contracts before their outcomes are finalized. This approach lets you lock profits or minimize losses before the event ends.
And as we found out in a Robinhood review, it’s also best to avoid trading low-volume event contracts. That’s because there may not be enough liquidity between buy and sell orders, so you could struggle to adjust or close your positions when needed.
Key factors to note before trading at prediction markets in the US
Being legal doesn’t automatically mean a platform is totally safe for you to trade its available event contracts. That’s why, before committing to any platform, run through these basics:
🔑 Licensing
This is the clearest marker for determining whether a prediction market site is legit at the federal level. So, take the time to check the footer section for CFTC and DCM status. If you cannot find it there, explore its terms and conditions. If it’s not there, feel free to exit such a brand.
🌍 State availability
Check the platform’s eligibility page. Several sites go out and beyond to provide an infographic of the US and clearly mark regions where certain event contracts are available. So, if where you reside doesn’t offer access to sports event trading, you could consider economic, political, or cultural markets.
📄 Type of contracts offered
The common, and perhaps most straightforward, contract type is the Binary contract (Yes or No). Some platforms go the extra mile by offering categorical contracts that feature multiple outcomes. Then there are the scalar contracts, which are range-based and are less common. Explore the options that your preferred platform provides and choose the one that works best for you.
💰 Trading fees
Most platforms charge a small percentage on trades. Others add it before you buy or sell an event contract. Some platforms remove it from your potential winnings. So, know exactly the cost breakdown before you execute any trade.
Pros and cons of prediction markets in the USA
Here are the pros and cons of the prediction markets in the US.
Register and trade event contracts at any of our recommended prediction market sites today
Prediction markets are legal at the federal level in the US, with the CFTC as the governing authority. That means users can join these prediction market apps and explore the event contracts they want, whether in sports, politics, economics, culture, crypto, climate, or other areas.
So, if you’re ready to get started with a platform you can trust, we have the options right here for you. Simply browse the banners on this page to find a regulated prediction market that works for you and create an account.
The prediction market sites we recommend
FAQs on prediction markets
📝 What makes a prediction market platform legal in the US?
🚀 How do I get started on a prediction market platform?
🔍 How do prediction markets work?
Simon Day
Simon has been writing about Gaming and Sports for over a decade, with his work featured in a variety of well-known gaming magazines. In 2025, he joined win.gg as an Editorial Specialist, where he continues to share his passion for the industry through insightful and well-crafted content pieces.
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