Are prediction markets legal in the USA? Short answer: CFTC-regulated platforms are legal for US persons in most states. Long answer: it depends on the platform, the contract category, and your specific state. And we tackle the hard questions so you don’t have to guess.
Key Takeaways
- CFTC-registered prediction markets (Kalshi, Polymarket-via-QCEX, ForecastEx) are legal for US persons in most states.
- Specific contract categories. Sports especially. Face state-by-state restrictions. Geo-restriction is enforced at the contract level on regulated platforms.
- Offshore platforms accepting US deposits without CFTC registration are NOT legal venues. Using them forfeits federal-level recourse.
- This article is general information, not legal advice. Always verify your state’s current legality before depositing.
Don't miss new tech stories on Google
Add Tech Insider once in the Google app and our stories appear in your news suggestions.
The Federal Picture. What CFTC Authorization Actually Means
The DCM Framework Under the Commodity Exchange Act
The Commodity Futures Trading Commission (CFTC) regulates event contracts as a class of commodity derivative under the Commodity Exchange Act. Operators offering event contracts to US persons must register as Designated Contract Markets (DCMs). The same regulatory status that governs conventional futures exchanges like the CME and ICE. The DCM designation is what makes a prediction market venue legal to operate in the US; an unregistered platform accepting US deposits is operating outside the regulatory framework.
The DCM framework brings real participant protections. Registered DCMs must maintain segregated participant funds, follow market-conduct rules the CFTC enforces, publish standardized disclosures, and submit to CFTC examination. Participants on a DCM-registered venue have federal-level recourse for disputes. They can escalate to the CFTC through formal complaint channels that simply don’t exist at unregistered venues.
Three operators currently hold active DCM registrations for US-facing prediction markets: Kalshi (KalshiEX LLC), QCEX (which provides Polymarket’s US access following the 2024 acquisition), and ForecastEx (the NYSE Group’s event-contracts venue). Other operators marketing themselves as “prediction markets” without one of these registrations are operating in a different legal posture and should be treated accordingly.
CFTC Approval Process for New Contract Categories
A DCM-registered operator can list new contract categories through a CFTC review process that examines whether each category falls within the Commission’s regulatory remit. The standard review process is the self-certification path. The operator submits the proposed contract terms and the CFTC has a window to object. If the Commission does not object, the contract goes live. The Commission can also affirmatively approve contracts where the operator wants explicit clearance.
The 2024 sports-event-contracts clarification was a watershed moment for the category. Kalshi self-certified sports event contracts, faced regulatory challenges (most prominently from the Massachusetts AG), and ultimately prevailed at both the federal and state levels. The resolution established that sports event contracts can be listed under the DCM framework, opening a category that operators had previously been reluctant to attempt.
Other contract categories remain under active CFTC review on a case-by-case basis. New categories. Particularly novel forms of cultural-event contracts and certain financial-event-derivative structures. Go through the same self-certification or affirmative-approval framework. The regulatory trajectory has been progressive expansion of approved categories rather than restrictive pullback.
Federal vs State Jurisdiction Tension
The federal-state jurisdictional question is the live edge of prediction-market law. The Commodity Exchange Act provides for federal preemption over commodity derivatives, a doctrine that legal observers consistently apply to CFTC-regulated event contracts. State Attorneys General have at times asserted that state-level gaming laws apply to specific contract categories (sports especially), creating a jurisdictional friction the federal courts continue to work through.
The Massachusetts vs Kalshi resolution leaned in favor of federal preemption for sports event contracts, but it did not settle the question for every state or every contract category. Other state-level challenges have moved through state and federal courts with mixed outcomes. Most resolving in favor of the federally-regulated operator, but with enough variation that participants should verify their specific state’s current posture before depositing.
For practical purposes, the operators handle this by enforcing geo-restrictions at the contract level. A participant in a state where a specific contract category is restricted will see that category unavailable in their account, without affecting their access to other categories. The geo-restriction is the operator’s compliance mechanism. Participants should not attempt to bypass it.
State-by-State Status (August 2026)
States Where All Major Operators Are Available
The majority of US states currently allow access to the full contract catalog at Kalshi, Polymarket-via-QCEX, and ForecastEx. New York, Texas, Florida, Illinois, Pennsylvania, Georgia, Ohio, Michigan, and most other major states are in this category. Participants in these states see the full event surface across all three regulated operators with no contract-level restrictions.
The “full access” status applies to the current snapshot. State-level positions can shift as new state legislation, court rulings, or AG actions emerge. The operators’ own state-eligibility tables are the source of truth and update faster than any third-party tracking can keep current. Participants should check the eligibility table on the operator’s site before depositing.
For participants in these states, the practical experience is identical to accessing any other CFTC-regulated venue. KYC, deposit, trade, withdraw, with federal-level regulatory recourse standing behind the operator. The state-level question is invisible to the participant because no state-level restriction applies to their account.
States with Sports-Contract Restrictions
A subset of states restrict specific sports-event-contracts categories on top of the federal regulatory framework. The specific state list shifts as the post-2024 sports-clarification jurisprudence develops, but as of August 2026, participants in a handful of states will see sports-event contracts geo-restricted in their accounts while other contract categories (politics, economics, weather, crypto-price) remain fully accessible. The geo-restriction is enforced operator-side. The participant cannot trade restricted categories regardless of attempted workarounds.
The reason for the sports-specific restrictions: state gaming commissions assert that sports event contracts overlap with regulated state-level sports betting in ways that justify state-law application. The federal courts have generally sided with federal preemption, but the issue continues to evolve through state-by-state litigation. Participants in states with sports-contract restrictions can still use the regulated venues for every other contract category.
Massachusetts is the highest-profile example, with the AG’s initial challenge against Kalshi sports contracts ultimately resolved in Kalshi’s favor at the federal level. Other states maintaining sports-contract restrictions include those where state gaming commissions have asserted similar positions. The list changes. Current status appears on each operator’s state-eligibility table.
States Watching Closely (Pending Litigation)
A small number of states have pending litigation or regulatory inquiries that may affect access in the near term. Participants in those states currently have access (or contract-category-restricted access) but should monitor the litigation outcome. A state-level reversal could affect their access on short notice. The operators communicate state-eligibility changes through account notifications and their public eligibility tables.
The pending-litigation status doesn’t make current activity in those states illegal. Participants can deposit and trade as the eligibility table allows. It does mean participants should think carefully about position-holding horizons. A position held into a state-level reversal would be wound down through the operator’s standard process, but the operational uncertainty is meaningful for participants planning long-duration positions.
For the most current state-level picture, our state-by-state legality page tracks current status per state and gets re-verified quarterly. The operators’ own eligibility tables update in real-time and are the source of truth for actual access. Our page provides the broader context and litigation summary.
Major Operators and Their Specific Legal Standings
Kalshi. Direct DCM Registration
Kalshi (KalshiEX LLC) holds a direct CFTC Designated Contract Market registration. This is the strongest US regulatory posture available to a prediction-market operator. The DCM registration is verifiable through the CFTC’s public registry. The platform has operated under the registration since launch and has cleared every contested contract category through CFTC review since 2024.
The direct-registration structure is operationally clean. There’s no intermediary entity in the regulatory chain. State-level interactions go directly through Kalshi as the named registered entity. Participants choosing Kalshi get the cleanest single-entity regulatory posture available in the US prediction-market space. Full operator review at /kalshi-review/.
For participants whose top regulatory criterion is registration simplicity and the cleanest possible recourse chain, Kalshi is the answer. The direct DCM structure makes participant recourse mechanically straightforward when disputes arise. A meaningful protection that participants should value when allocating capital.
Polymarket. Access via QCEX
Polymarket’s US access operates through QCEX, a CFTC-registered Designated Contract Market and Derivatives Clearing Organization that Polymarket acquired in 2024 to enable US re-entry following the 2022 CFTC enforcement action that previously restricted US access. The QCEX registration provides CFTC supervision equivalent to Kalshi’s direct DCM; the regulatory tier is the same, with one additional entity in the chain.
The two-entity structure (QCEX as the registered entity, Polymarket as the operator of the market mechanics) is slightly more complex from a participant-recourse perspective but is functionally equivalent. Disputes route through QCEX as the CFTC-registered party. For most participants this is invisible. The regulatory recourse exists, it just takes a marginally longer path to invoke if needed. Full operator review at /polymarket-review/.
The 2022 CFTC action against Polymarket was a $1.4M settlement that resulted in Polymarket withdrawing US access until the regulated re-entry path was established via QCEX. The current framework resolved that earlier issue completely. Polymarket-via-QCEX operates under active CFTC supervision and the pre-acquisition gray-zone status is no longer in effect for US participants.
ForecastEx, PredictIt, and Others
ForecastEx operates as a CFTC-registered Designated Contract Market and Derivatives Clearing Organization (a rare double registration) under the NYSE Group. Its regulatory posture is on par with Kalshi’s for the contract categories it offers. Primarily economic indicators, weather, and select political event categories. Access is most natural through Interactive Brokers, which integrates ForecastEx contracts into its platform.
PredictIt operates under a CFTC no-action letter issued in 2014 to Victoria University, treating the platform as an academic research vehicle. The no-action posture is narrower than direct DCM registration. It carries structural limits (position caps, contract caps) that reflect the academic-exception framing and doesn’t extend to broad commercial expansion. PredictIt is legal for participants who accept the limits, but it operates in a regulatory category distinct from the DCMs.
Other operators marketing themselves as “prediction markets” without one of these regulatory frameworks (direct DCM, DCM-via-acquisition, or CFTC no-action letter) are operating outside the federal regulated space. The legal status of such operations for US participants is murky and the federal recourse mechanisms that protect participants on regulated venues do not apply. We don’t recommend participation at such venues regardless of how they market themselves.
Recent Legal History You Should Know
The 2022 CFTC Action Against Polymarket
In January 2022, the CFTC fined Polymarket $1.4M for operating an unregistered facility for binary options. The action resulted in Polymarket restricting US access for the period leading up to the 2024 QCEX acquisition. The 2022 action established that the Commission would actively enforce DCM-registration requirements against unregistered event-contract operators serving US persons. The era of unlicensed gray-zone operation was over.
The action’s deeper significance: it set the precedent that triggered the broader regulated re-entry path. Polymarket’s QCEX acquisition, Kalshi’s accelerated DCM-registration pursuit, and ForecastEx’s launch all happened against the backdrop of the 2022 action signaling that participants would only be allowed at regulated venues going forward. The category’s current shape reflects that regulatory inflection.
For participants today, the 2022 action is most relevant as background. The current Polymarket operates under the QCEX framework and is no longer the unlicensed operation the 2022 settlement addressed. Participants should not confuse the pre-2024 regulatory status with the current posture. The legal picture today is materially different.
The 2024 Kalshi Sports-Event-Contracts Resolution
The 2024 resolution of the Massachusetts AG challenge to Kalshi sports event contracts was the watershed moment for the broader category. The Massachusetts AG had asserted that Kalshi’s sports contracts violated state gaming laws despite the federal CFTC framework. The federal court ruling sided with Kalshi, establishing federal preemption for CFTC-regulated event contracts even where state gaming commissions assert overlapping jurisdiction.
The ruling did not settle the question for every state or every contract category, but it established the precedent the rest of the industry now operates under. Sports event contracts at Kalshi are now widely available, with state-level restrictions on a narrower list than the pre-ruling environment. Other operators have followed Kalshi into the sports category under the same regulatory framework.
The deeper significance: the ruling clarified that CFTC-regulated event contracts can include categories that overlap with state-regulated activities (gaming, sports betting, lotteries) without losing their federally-regulated status. The clarification opened contract categories the industry had previously avoided and produced the catalog expansion participants now access.
Ongoing State-Level Litigation
Several state AGs and state gaming commissions continue to test specific contract categories at specific operators. The litigation pattern is similar to the Massachusetts vs Kalshi resolution. State-level challenges to federally-regulated event contracts based on state-level gaming or consumer-protection authorities. Most have resolved in favor of federal preemption following the 2024 precedent, but each case adds incremental clarity (or uncertainty) to the broader frame.
For participants, the practical impact of ongoing litigation is limited. Geo-restrictions enforce state-by-state availability operator-side, so participants don’t need to track each state’s litigation status independently. The operators’ eligibility tables reflect the current operational reality. Participants who want the broader context can follow trade-press coverage of major state-level actions.
The trajectory has been toward broader access. State-level challenges resolving in favor of federally-regulated operators, contract categories expanding through CFTC-review, and the addressable participant base growing rather than shrinking. The 12-18 month outlook continues that trajectory unless a major court ruling reverses the federal-preemption framework, which the legal observers we track view as unlikely.
What’s NOT Legal. Operators We Don’t Recommend
Offshore “Prediction Sites” Without CFTC Registration
A number of offshore operators accept US deposits and market themselves as “prediction markets” without holding CFTC registration. These operations are not legal venues for US participants. Depositing at such a venue forfeits the federal regulatory protections that exist at registered operators. Participants in disputes have no CFTC recourse, segregated-funds protection is unverifiable, and the operator can change terms or freeze accounts without the regulatory accountability registered operators face.
We maintain an exclusion list of offshore “prediction market” operators that we have considered and rejected from our published rankings on this basis. The list is updated quarterly as new entrants emerge. The pattern is consistent: large marketing spend, often crypto-funded, sometimes branded to look like regulated operators, never holding the actual regulatory registration the marketing implies.
Why does the offshore option even exist when regulated alternatives are available? Some operators target US participants for the addressable-market reasons. Some are legitimate prediction-market operations in their home jurisdictions that accept US deposits without specifically working through US compliance. Regardless of the operator’s intent, the regulatory posture for US participants is the same. Unprotected and not recommended.
Sweepstakes Products Marketed as Prediction Markets
Sweepstakes-model casino apps that include “prediction” features are a different category entirely. These operations run under state-by-state sweepstakes laws, not under CFTC event-contracts framework. The mechanics are different (sweepstakes promotions rather than tradable contracts), the participant recourse framework is different, and the underlying legal authority is different. Operators marketing sweepstakes products as “prediction markets” are conflating the categories in ways that don’t change the underlying legal posture.
Sweepstakes-model operators are not illegal per se. They operate legally in many states under state-level sweepstakes laws. But they’re not the same product as a CFTC-regulated prediction market, and participants who think they’re using one when they’re using the other are making a category mistake that affects everything from contract liquidity to dispute recourse. Confirm what you’re actually using by checking the operator’s stated regulatory authority.
Our coverage focuses on CFTC-regulated prediction markets specifically. Sweepstakes products fall outside our review scope. Participants seeking sweepstakes options should consult coverage focused on that category specifically. The distinction matters and should not be blurred by operator marketing.
Why VPN Access to Banned Operators Is Risky
Some participants consider using VPN access to reach operators that geo-restrict US persons. This is a bad idea for multiple reasons. First, attempting to bypass geo-restrictions violates the operator’s terms of service. Confiscated balances and frozen accounts are common outcomes when the bypass is detected. Second, depositing at an operator that has chosen to exclude US persons forfeits whatever regulatory recourse might have existed. The operator is not subject to US enforcement on accounts that should not exist. Third, depending on the contract category and US legal status, the participant’s own activity may have legal exposure.
The CFTC-regulated alternatives exist precisely so participants don’t need to attempt workarounds. Kalshi, Polymarket-via-QCEX, and ForecastEx between them offer access to the meaningful event categories US participants would want to trade. The events Polymarket and Kalshi don’t cover at depth are usually long-tail enough that the friction of VPN access at an unregistered foreign venue isn’t worth the legal and operational risk.
Manifold Markets provides a play-money alternative for participants who want exposure to events that don’t appear on the regulated venues. The play-money structure removes the regulatory complexity and lets participants explore market dynamics on any event without risking real capital at an unregulated operator. For research and forecasting practice, Manifold is the right answer to the “I want to predict event X but no regulated operator lists it” question.
Practical Steps Before You Deposit
Verify Your State’s Current Status
The single most important pre-deposit step is verifying your state’s current status at the operator you plan to use. Each regulated operator publishes a state-eligibility table showing which contract categories are available to participants in which states. The table is updated as state-level positions change and is the source of truth for actual access. Check it before signing up. The operator will not let you trade categories that are restricted in your state.
If you’re moving between states (military, work travel, relocation), the operator’s geo-restriction follows the address on file rather than the current location. Update the address when you move. Some categories may become available or unavailable based on the address change. The operator’s compliance flow handles this transparently. The participant doesn’t need to do anything beyond keeping the address current.
For the broader context behind the state-eligibility table. Why specific categories are restricted in specific states, what the underlying litigation looks like. Our state-by-state legality page provides the analytical framing. The operator’s table tells you what’s available. Our page explains why.
Confirm Operator Registration via CFTC Registry
For any operator you plan to use, verify their CFTC registration directly through the CFTC’s public registry rather than taking the operator’s word for it. The CFTC maintains a searchable directory of all registered DCMs and DCOs that lets you confirm the operator’s name, address, and registration status match what the operator claims on its own marketing materials.
Discrepancies between operator marketing and CFTC registry data are red flags. We’ve seen marketing materials cite registrations that don’t exist, registrations that have been revoked, or registrations belonging to differently-named entities. None of these patterns appear at the major regulated operators we cover (Kalshi, Polymarket-via-QCEX, ForecastEx. All of which check out cleanly), but participants should perform the verification themselves rather than relying on the operator’s representations.
Our review process verifies registration as part of pre-screening. Operators with verifiable registrations clear the bar. Operators with discrepancies or absent registrations don’t get reviewed and don’t appear in our published rankings. The verification is part of why our operator coverage is narrow rather than expansive. We only recommend operators whose regulatory status checks out under direct verification.
Understand Your Recourse if Things Go Wrong
At a CFTC-regulated venue, participant recourse runs through several layers. First-line: the operator’s own dispute resolution process (typically responsive at the major operators). Second-line: formal complaint to the CFTC, which can investigate operator conduct and impose remedies. Third-line: federal court action where the regulatory process doesn’t resolve the participant’s issue. Each layer exists because the federally-regulated status mandates it.
Document your activity from the first deposit. Save deposit confirmations, trade confirmations, withdrawal receipts, and any support correspondence. If a dispute arises, the documentation is the foundation of your case at every level of recourse. Operators maintain their own records, but participants should not depend on operator-side documentation as the only record of their activity.
For specific dispute scenarios beyond the operator-side process, the CFTC’s complaint process is the next step. The Commission accepts complaints through its public-facing channels and investigates patterns that suggest operator non-compliance with DCM rules. For larger disputes, federal court action may be the path forward. Participants should consult an attorney familiar with commodity-derivatives law for specific dispute scenarios. This article is general information, not legal advice for any specific situation.
How the CFTC’s Authority Over Event Contracts Works
Event contracts in the US fall under the Commodity Futures Trading Commission, the same federal regulator that oversees futures and derivatives. That is the single fact that explains most of what follows. A platform that wants to offer these contracts to US participants legally registers with the CFTC as a regulated exchange, agrees to rules about how it writes and settles contracts, and submits to federal oversight. A platform that skips that step and serves US customers anyway operates outside the framework. When you read that a venue is regulated, this is the body doing the regulating, and you can check a platform’s standing directly through the CFTC.
This matters because the legal question is rarely about you as an individual trader. Participating in a market on a regulated US exchange is not the part that carries legal risk. The risk and the legal grey area sit with platforms that operate without authorization. Choosing a registered venue is therefore the cleanest way to keep yourself on the right side of the line.
Regulated Versus Unregulated: A Quick Test
You do not need to be a lawyer to sort the safe venues from the risky ones. A few checks separate a registered exchange from an offshore site dressed up to look legitimate. The table below is the short version you can run in a couple of minutes before you ever enter a card number.
| Check | Regulated venue | Warning sign |
|---|---|---|
| Registration | Named CFTC registration you can verify | Vague or offshore licensing claims |
| Funding | Transparent dollar or stablecoin rails | Pressure to send crypto to a personal wallet |
| Settlement terms | Published, named resolution source | Unclear or operator-decided outcomes |
| Recourse | A federal regulator to appeal to | No one to contact if a payout is denied |
What a Designated Contract Market Actually Is
You will see the term designated contract market, often shortened to DCM, attached to the legitimate platforms. It is worth understanding because it is the legal status that lets a venue offer event contracts to US traders. A DCM is an exchange that has registered with the CFTC and agreed to operate under a defined set of rules covering contract design, market integrity, and the handling of customer funds. In plain terms, it is the difference between a venue that has signed up to the rulebook and one that has not. When a platform describes itself as a regulated exchange, this is usually the registration it is referring to, and it is the foundation of the protections you get as a participant.
Why Election Markets Became the Flashpoint
Of all the contract types, political and election markets generated the most legal friction. Regulators were cautious about letting people trade directly on the outcome of elections, and the question of whether a regulated exchange could list those contracts went through a public legal fight. The outcome opened the door for regulated US election markets, which is why the deepest political order books now sit on registered venues. The episode is a useful reminder that the rules here are still being written through cases and decisions, so a market that is available in one cycle may sit on different legal footing in the next. Treat the current state as the current state, not a permanent settlement.
The Offshore Trap: Why Unregulated Sites Are Risky
The internet is full of sites that will happily take a US deposit for an event contract without any US registration. The pitch is tempting: more markets, fewer questions, no identity checks. The risk is the part they do not advertise. On an unregulated offshore site there is no federal regulator standing behind settlement, no rule keeping your balance separate from the operator’s own money, and no one to appeal to if a withdrawal is simply refused. People do get paid on these sites, right up until they do not, and when that happens there is no recourse. The extra markets are rarely worth trading your entire balance against a venue that can vanish.
State-Level Friction and What It Means for You
Federal registration is the foundation, but several states have raised their own objections to event contracts, and a handful have pushed back against specific operators or contract types. The result is a patchwork where a platform may be open in most of the country yet restricted or contested in particular states. For a participant, the practical effect is that a venue can accept your signup and still block certain markets based on where you live. The picture moves as operators and state authorities argue the boundaries, so check the current position for your state in our guide to prediction markets by state rather than assuming national availability.
Your Protections on a Regulated Venue
| Protection | What it means for you |
|---|---|
| Fund separation | Your balance is held apart from the operator’s own money |
| Published settlement | Outcomes resolve against a named source, not a whim |
| Federal oversight | A regulator can act if the venue breaks the rules |
| Recourse | A real channel to escalate a dispute |
Taxes and Your Reporting Obligations
Legal access and tax treatment are separate questions, and it is easy to forget the second. Profit on event contracts is taxable, and a regulated US platform may issue a tax form summarizing your year. How the gains are categorized can depend on the platform and the contract, and the treatment is still maturing, so keep your own record of deposits, trades, and withdrawals rather than relying on memory. The dependable step is to confirm current requirements against official guidance or with a tax professional. Staying legal on the trading side and tidy on the tax side are both part of doing this properly.
How to Verify a Platform Before You Deposit
Before you fund any account, spend five minutes confirming it is what it claims to be. Look for a named, verifiable CFTC registration rather than a vague reference to being licensed somewhere. Read how the platform says it settles markets and holds funds. Search for the operator alongside terms like withdrawal and complaint to see how real users describe getting paid. Be especially wary of any site that discourages identity checks or pushes you to send crypto to a wallet address. A legitimate regulated venue welcomes the scrutiny, because its standing is exactly what it is selling.
Questions to Ask Before You Fund an Account
- Is the platform registered with the CFTC, and can I verify that independently?
- Does it clearly state who is and is not allowed to trade based on state of residence?
- Are the settlement source and contract terms published before I trade?
- How are customer funds held, and is that separation stated plainly?
- If a payout were disputed, what is the actual channel to escalate it?
Frequently Asked Questions
Is Polymarket actually legal in the US again?
Yes. Polymarket’s US access operates through QCEX, a CFTC-registered DCM and DCO that Polymarket acquired in 2024 to enable US re-entry. The current framework resolved the 2022 CFTC enforcement action that previously restricted US access. Polymarket-via-QCEX is now under active CFTC supervision and US participants can deposit, trade, and withdraw legally. State-level eligibility may restrict specific contract categories. Check the platform’s state-eligibility table before depositing.
Can I trade sports event contracts everywhere in the US?
Mostly yes, with state-by-state exceptions. The 2024 Massachusetts vs Kalshi resolution established federal preemption for CFTC-regulated sports event contracts, opening the category across most US states. A handful of states continue to restrict specific sports contracts. The regulated operators enforce geo-restriction at the contract level. Your account will show or hide categories based on your state’s current status.
What happens to me if I use an unregistered offshore prediction market?
You forfeit the federal regulatory protections that exist at CFTC-registered operators. Your account isn’t covered by segregated-funds rules, you can’t escalate disputes to the CFTC, and the operator can change terms or freeze accounts without the regulatory accountability registered operators face. Depending on the contract category and your state, your own activity may have legal exposure too. The regulated alternatives exist specifically so participants don’t need to take this risk.
Are my prediction market winnings reported to the IRS?
At CFTC-registered operators (Kalshi, Polymarket-via-QCEX, ForecastEx), winnings above the IRS reporting threshold are reported via Form 1099-MISC issued in February for the prior tax year. Winnings below the reporting threshold are still taxable. Participants are responsible for self-reporting all winnings regardless of whether a 1099 is issued. Offshore operators typically do not issue US tax forms, but the tax obligation on US persons exists regardless. Consult a tax professional for specific reporting treatment in your situation.
Can my state’s laws override the federal CFTC framework?
The federal-state jurisdictional question is the live edge of prediction-market law. The 2024 Massachusetts vs Kalshi resolution leaned in favor of federal preemption for CFTC-regulated event contracts, even where state gaming commissions assert overlapping jurisdiction. The federal preemption position has continued to prevail in subsequent state-level challenges, but the question is not fully settled for every state or every contract category. State-level changes can affect access on short notice. Participants should monitor the operator’s eligibility table and any state-level litigation that may affect their access.
If I move to a different state, do I lose my account?
No, the account stays with you. The operator’s geo-restriction follows the address on file. Updating your address when you move triggers a re-evaluation of which contract categories are available in your new state. Some categories may become available or unavailable based on the address change, but the account itself transfers cleanly. Existing positions held at the time of address change are subject to the operator’s standard winding-down process if a category becomes unavailable in your new state.
Written by Morgan Reeves. Senior reviewer covering US-regulated and gray-market gambling and prediction platforms since 2022. This article is general information about US prediction-market legality and is not legal advice. Consult a qualified attorney for specific situations. Updated quarterly with state-level developments and CFTC actions.
Last updated: May 2026
Authoritative References
- CFTC Press Releases – primary source for US prediction-market regulatory actions.
- CFTC Designated Contract Markets – registry of CFTC-regulated exchanges.
- Kalshi Help Center – operator docs on contract types and settlement.
- Polymarket Learn – primer on USDC funding and market resolution.
- IRS Publication 550 – tax guidance for Section 1256 contracts.
Related Coverage
- Best Prediction Markets USA (2026) – master ranking of 6 tested operators.
- How Do Prediction Markets Work – beginner primer.
- Are Prediction Markets Legal in the USA – CFTC framework.
- Prediction Markets by State – 50-state matrix.
- Kalshi Review – CFTC-regulated US-legal liquidity.
- Polymarket Review – USDC-funded via QCEX.
- Kalshi vs Polymarket – head-to-head.
Related prediction market coverage
