Are Prediction Markets Legal? State-by-State Guide [2026]

Federal Status: Legal and Regulated

Prediction markets are legal at the federal level in the United States. The Commodity Futures Trading Commission (CFTC) regulates prediction markets as financial derivatives — the same body that oversees futures and options exchanges.

In January 2026, Google officially classified prediction markets as FINANCE (not gambling). This was a landmark decision that:

• Removed YMYL gambling penalties from search results
• Allowed Google Ads for CFTC-authorized prediction platforms
• Set a lower content trust bar than gambling sites
• Signaled mainstream acceptance of the industry

Platform-by-Platform Legal Status

Kalshi — Fully Legal (Nationwide)

Kalshi is the only CFTC-designated contract market for event contracts. It’s legal in all 50 states because it operates under federal financial regulation, not state gaming laws.

• Status: Fully legal, CFTC-regulated
• Access: All 50 states + DC
• Political markets: Approved after legal battle with CFTC (won in court)
• Requirements: KYC verification, US resident, 18+

DraftKings Predictions — State-by-State

DraftKings operates under state gaming licenses. Their prediction features are available in states where DraftKings has a gaming license.

• Status: Legal in licensed states
• Access: 20+ states
• Requirements: State residency, age verification, KYC

FanDuel Predicts — State-by-State

Same as DraftKings — available in states where FanDuel has gaming licenses.

• Status: Legal in licensed states
• Access: 20+ states
• Requirements: State residency, age verification, KYC

Polymarket — Not Legal for US Residents

Polymarket settled with the CFTC in 2022 for $1.4M and agreed to block US users. Using a VPN to access Polymarket from the US may violate:

• Polymarket’s terms of service

• CFTC regulations on unauthorized derivative trading

• Status: Not legal for US residents

• Global: Available in most countries outside the US

• Risk: VPN use is a gray area — your funds could be at risk

Crypto.com OG — Varies by Jurisdiction

Crypto.com operates under various crypto exchange licenses globally. Availability depends on your country and state.

State-by-State Quick Reference

Prediction Markets (CFTC-Regulated like Kalshi)

Legal in all 50 states — Federal regulation preempts state gaming laws for CFTC-designated contract markets.

Sportsbook Predictions (DraftKings, FanDuel)

Status	States
Legal	AZ, CO, CT, IL, IN, IA, KS, KY, LA, MA, MD, MI, NJ, NY, OH, OR, PA, TN, VA, WV, WY
Not legal	AL, AK, CA, FL, GA, HI, ID, ME, MN, MS, MO, MT, NE, NV, NH, NM, NC, ND, OK, RI, SC, SD, TX, UT, VT, WA, WI

Note: This list changes frequently as states pass new gaming legislation. Check the DraftKings/FanDuel apps for current availability.

The CFTC vs State Gaming Distinction

This is the most important legal concept for prediction markets:

Aspect	CFTC-Regulated (Kalshi)	State Gaming (DraftKings/FanDuel)
Regulator	Federal (CFTC)	State gaming commissions
Classification	Financial exchange	Gaming/gambling
Nationwide?	Yes	State-by-state
Tax treatment	Capital gains (1099-B)	Gambling (W-2G)
Google classification	Finance	Gambling

What to Watch in 2026

• More state legalization — Multiple states are considering prediction market-specific legislation
• CFTC expansion — Kalshi continues to add new contract types
• Google Ads — Prediction platforms can now advertise on Google (finance, not gambling)
• Potential Polymarket US return — Regulatory discussions ongoing about a legal path for crypto-native platforms
• World Cup 2026 — Hosted in the US, will test the regulatory framework with massive volume

Our Recommendation

For US residents who want to trade legally:

1. Start with Kalshi — Legal in all 50 states, CFTC-regulated
2. Add DraftKings or FanDuel if in a licensed state — great for sports predictions
3. Avoid Polymarket from the US — The legal risk isn’t worth it when Kalshi offers a regulated alternative