Venice Prediction Markets Los Angeles prediction-markets desk

How to Trade in California

Everything a California resident needs to go from zero to placing their first prediction market trade — and what to know about taxes when you start winning.

Updated

Prediction markets aren't sportsbooks. Contracts trade between traders, prices represent real probabilities, and you can sell your position at any time — even mid-game. California has no licensed online sportsbooks; CFTC-regulated event-contract exchanges accept eligible Californians (status: Available, dispute pending, as of 13 October 2026).

California does tax winnings as state income (1%–13.3%), so the tax math matters more here than in zero-income-tax states. And the legal picture here is still moving: California is in the Ninth Circuit, whose 2026 rulings went against Kalshi at the preliminary stage, so check our legality page before you fund an account. Below are the two guides that get every new California trader started right.

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Certain limitations apply. The offer is available to new users only, subject to the terms and conditions at kalshi.com/tc/500. 18+ only. Restrictions and eligibility requirements apply. Event contract trading involves significant risk and is not appropriate for everyone. Please carefully consider if it is appropriate for you in light of your personal financial circumstances. Kalshi products are not available in all jurisdictions. See kalshi.com/regulatory for more information.

See also

Beginner's Guide: How Prediction Markets Work (For California Traders)

Featured · Beginners

Beginner's Guide: How Prediction Markets Work (For California Traders)

A plain-English guide to prediction markets for Californians — what they are, how they differ from Kalshi, and how to make your first trade.

Read guide

Tax

Prediction Market Taxes in California: What Traders Need to Know

How federal and California state taxes apply to your Kalshi gains — and how to plan around CA's 1%–13.3% income tax brackets.

6 min read · February 8, 2026

How to read the order book

  • Every contract has two sides, Yes and No. The order book lists the prices people are willing to buy at (bids) and sell at (asks), and how many contracts sit at each price.
  • The spread is the gap between the best bid and the best ask. A wide spread means fewer traders, so you pay more to get in and out.
  • A market order fills straight away at the best available price; a limit order lets you choose your price and waits until someone takes it.
  • Check the depth before a bigger trade: if only a few contracts sit at the best price, the rest of your order fills at worse prices.
  • Fees are shown in the order ticket before you confirm.

Pillar pages

Sources & references

  1. Commodity Futures Trading Commission — Event Contracts (opens in a new tab) — CFTC.gov
  2. IRS — Topic No. 419, Gambling Income and Losses (opens in a new tab) — IRS.gov
  3. IRS — About Form 1099-MISC (opens in a new tab) — IRS.gov
  4. National Council on Problem Gambling — 1-800-GAMBLER (opens in a new tab) — 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.

Frequently asked questions

How do I start trading prediction markets in California?
Sign up at Kalshi (a CFTC-designated contract market that accepts eligible Californians, except on three tribes' lands), verify your identity with a driver's license and California address, deposit via ACH or debit, and place your first Yes/No contract. The whole process takes about 10 minutes if you're 21+ and have ID handy. Eligible Californians can sign up statewide, except on the lands of three California tribes that Kalshi geofenced in September 2026 after a Ninth Circuit ruling.
Do I have to pay taxes on prediction market winnings in California?
Yes — both federally and at the state level. Profits are taxable, but the IRS hasn't said how event contracts are classified; Kalshi provides a profit-and-loss statement for your trades. California then taxes the same winnings as state income at rates from 1% to 13.3%. Track every trade and consult a tax professional familiar with event contracts.
Can I lose more than I deposit on a prediction market?
No. Every Yes/No contract is fully collateralized — the maximum you can lose on any single contract is what you paid for it. There is no margin, no leverage, and no liability beyond your deposited balance on CFTC-regulated venues.