Are Prediction Markets Legal in the US? (2026 State-by-State)
Yes — prediction markets are legal in all 50 states and DC when operated by a CFTC-registered exchange like Kalshi. Here's why and where.
- Trading on offshore prediction markets that lack CFTC registration (e.g. PredictIt was forced to wind down in 2022 after losing its CFTC no-action letter).
- Trading on Kalshi's pre-2025 web platform from the US — that platform was illegal for US users until Kalshi acquired CFTC-registered QCX and relaunched.
- Sports betting through prediction-market wrappers that don't have CFTC market listings (a recurring scam).
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Why prediction markets are legal in all 50 states
Kalshi operate under CFTC registration as Designated Contract Markets (DCMs) — the same federal license class as the Chicago Mercantile Exchange. The Commodity Exchange Act gives the CFTC exclusive jurisdiction over derivatives trading, which legally preempts state gambling code. Federal courts have repeatedly upheld this distinction.
What about state attorneys general who threatened action?
A handful of state regulators (NJ, NV, OH, others) issued cease-and-desists to Kalshi in 2024-2025. Federal courts have so far sided with Kalshi, ruling that CFTC oversight preempts state gambling enforcement. The platform remains available in every state during these legal challenges.
State-by-state availability
Kalshi is available to verified residents 21+ in all 50 states and DC. Kalshi's US iOS app is available to verified residents 18+ in all 50 states and DC. There is currently no state where a US resident is legally barred from creating an account.
What is not legal
- •Trading on offshore prediction markets that lack CFTC registration (e.g. PredictIt was forced to wind down in 2022 after losing its CFTC no-action letter).
- •Trading on Kalshi's pre-2025 web platform from the US — that platform was illegal for US users until Kalshi acquired CFTC-registered QCX and relaunched.
- •Sports betting through prediction-market wrappers that don't have CFTC market listings (a recurring scam).
Tax treatment
Net winnings are federally taxable as ordinary income in every state. Some states (TX, WA, NV, TN, SD, AK, WY, NH, CA) have no state income tax; California is not one of them and taxes winnings at 1% to 13.3%. Others tax winnings at standard state income rates.
Last reviewed by Catie Di Stefano on August 7, 2026. We re-verify market prices, polling, and citations on every update.
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Sources & references
- 1.Commodity Futures Trading Commission — Event Contracts — CFTC.gov
- 2.CFTC Final Rule on Event Contracts — CFTC.gov
- 3.Kalshi wins court battle to offer election contracts — Reuters
- 4.National Council on Problem Gambling — 1-800-GAMBLER — NCPG
External links open in a new tab. We cite primary regulatory and major news sources where possible. Citations to trusted regulators (CFTC, SEC, IRS, NOAA, .gov, .edu) are dofollow; commercial outbound links are not endorsements.
Catie Di Stefano has spent 15 years working with online gambling across some of the most regulated and competitive gambling markets in the world.
Starting at Betsson Group in Malta in 2011, she has in recent years worked her way through VIP management, CRM, gamification and marketing leadership across European and North American operations. Catie was a licensed consultancy for Hard Rock Casino in New Jersey, where she held a DGE vendor license and owned the execution of the online CRM program from launch day in 2018.