Are Prediction Markets Legal in the US?

The single most important thing to understand about prediction markets in the United States is that there are two completely separate regulatory tracks, and they almost never intersect.

The first is CFTC regulation. Kalshi is a Designated Contract Market — the same legal status held by the CME and ICE Futures US — and its event contracts are derivatives under the Commodity Exchange Act. Any US resident over 18 can fund a Kalshi account, trade rate contracts, election markets, weather contracts, and dozens of other event types, and withdraw the proceeds to a US bank without any state-level licensing question. CFTC regulation pre-empts state law on this question, which is why Kalshi works identically in Texas and in New York.

The second track is everything else. Polymarket, the largest prediction market in the world by volume, geo-blocks every US IP address. That block dates to a 2022 CFTC consent order that fined Polymarket $1.4 million for offering binary options to US persons without registration. Polymarket has not registered since. Using a VPN to bypass the block is a violation of Polymarket's terms of service and almost certainly a violation of the CFTC consent order; it has so far not resulted in publicly reported individual enforcement, but the legal exposure is real and asymmetric.

Manifold occupies a third position. Because Manifold uses play-money credits rather than real currency, it is not a futures contract, not a security, and not subject to state gambling law. US users can trade freely.

For a US resident, the practical implication is straightforward. Kalshi is the regulated option, the only one a financial professional can put on a compliance disclosure without a flag, and the only one that integrates cleanly with US banking and tax reporting. Polymarket is off the table without accepting real legal risk. Manifold is a useful information source but not a way to put real capital behind a view.

The broader policy fight is over whether more CFTC-registered venues will follow Kalshi, and whether the SEC will eventually pull jurisdiction over certain contract types. The 2024 court rulings in Kalshi's favor on election contracts have created precedent that the CFTC, not the CFTC-and-state-regulator-stack, owns this market. Expect more entrants in 2026 and 2027 — but for now, in the United States, Kalshi is the answer.