The legal landscape for prediction markets in the United States entered 2026 in a clearer state than at any point in the previous decade. A 2024 federal court ruling forced the Commodity Futures Trading Commission to allow Kalshi to list event contracts to retail traders. A 2025 interpretive ruling from the same regulator opened the door to certain sports event contracts. The headline question retail users keep asking is now answerable: yes, prediction markets are legal in the United States, with caveats.
What is legal today
Kalshi operates as the only CFTC-regulated retail prediction market in the country. US residents can fund accounts with a US bank, trade event contracts on politics, economics, sports, and climate, and report income on standard tax forms. The platform sits inside the same regulatory perimeter as commodity futures.
PredictIt continues to operate under a CFTC no-action letter as a research project of Victoria University. Position caps of $850 per contract limit how seriously professional traders can use it, but the platform is legal and remains popular with academic researchers and political enthusiasts.
Manifold Markets is play-money only and operates legally as a forecasting tournament platform with no real-money trading.
What is not legal for US residents
Polymarket remains geo-blocked for US residents under the terms of its 2022 CFTC settlement. Using a VPN to access the platform violates Polymarket’s terms of service and offers no regulatory recourse if something goes wrong with an account. We cover the full picture in Is Polymarket legal in the US?
Most decentralized prediction markets that operate without US licensing fall in a similar gray zone for US residents. The CFTC has signaled an active interest in enforcement against platforms that solicit US users without registration.
What changed in the last 12 months
Three developments stand out. First, the CFTC’s October 2025 interpretive ruling clarified that certain sports outcomes can qualify as listable event contracts, opening the door to Kalshi’s sports product. Second, the IRS issued updated guidance treating prediction market gains and losses similarly to other commodity-style derivatives. Third, several state attorneys general dropped pending challenges to Kalshi’s election contracts after the federal court ruling.
Looking forward, the open questions concern the rest of the category. Polymarket’s path to a regulated US relaunch, the legal status of decentralized event contracts more broadly, and the boundary between event contracts and licensed sports betting under state law all remain unresolved.
Practical guidance
For US residents who want to participate, the answer is straightforward: use Kalshi for the broad category, use PredictIt if you want niche state-level political markets and can live with the position cap, and use Manifold if you want to practice without risking real capital. Our full 2026 platform rankings break out every major option.
About this article: Written and reviewed by The PredictWire Research Team under our Editorial Standards. Platform rankings follow our public Methodology. Prediction market contracts carry risk of total loss. Nothing here is financial advice. Corrections: corrections@predictwire.io.