Prediction markets are federally legal in the United States. They are also the subject of more than a dozen active legal challenges from state regulators, at least two major federal circuit court splits, a Supreme Court question that is almost certain to be granted in 2026 or 2027, and a bipartisan bill introduced in Congress in March 2026 that would restrict them further. The answer to whether prediction markets are legal in the US in April 2026 is: yes, and also, it depends where you live, what you want to trade, and how the courts rule in the next twelve months.

The contradiction is real and it is structural. Federal law, specifically the Commodity Exchange Act, grants the CFTC exclusive jurisdiction over transactions on designated contract markets. Kalshi and Polymarket US are both CFTC-designated. Under the CFTC's reading, this means state gambling commissions have no authority over their contracts. Under the reading several states have advanced — Nevada, Massachusetts, Tennessee, Ohio, New Jersey, Arizona — states retain their traditional police-power authority to regulate gambling within their borders, regardless of how a platform labels its product. Courts have split on which reading wins. The question is now escalating through the federal appeals courts and is widely expected to reach the Supreme Court.

This guide covers the federal framework, the state-by-state picture as of late April 2026, the pending legal questions, and what it means in practice for users. The law is moving quickly — particularly on the state level — so always verify current status directly with the platform and your state before trading. Nothing here is legal or financial advice.

The federal position

At the federal level, prediction markets operating as CFTC-designated contract markets are legal and regulated. Kalshi has held its designation since 2020. Polymarket US inherited QCEX's designation in November 2025 following the $112 million acquisition and CFTC's Amended Order of Designation. Robinhood launched CFTC-registered event contracts in 2025 and reached $200 million in revenue in its first full year. Crypto.com operates a parallel prediction-market product under similar structure.

CFTC website page showing Kalshi's designation as a registered derivatives clearing organisation and designated contract market
Kalshi's CFTC designation as a registered derivatives clearing organisation: the federal framework that underpins its national operation and its preemption argument against state gambling regulators.

The CFTC's position, stated repeatedly and most recently in amicus briefs filed in the Ninth Circuit litigation, is that event contracts on designated platforms are "swaps" under the Commodity Exchange Act and fall within its exclusive jurisdiction. Under this reading, state gambling laws are preempted — states cannot regulate products that Congress has placed under federal derivatives authority. The CFTC has also entered a Memorandum of Understanding with Major League Baseball, a signal of how seriously it takes its jurisdictional claim over sports-event contracts.

The state regulators disagree. Their argument, advanced in litigation across multiple jurisdictions, is that federal preemption is narrower than Kalshi claims. The doctrine of conflict preemption — the more common standard — holds that federal law only displaces state law where the two genuinely conflict or where the state regulation obstructs federal objectives. Several courts have been sceptical that the CFTC's desire for a unified national approach to prediction markets satisfies that standard, particularly given states' long-recognised authority to regulate gambling.

The state-by-state picture

As of late April 2026, the state situation for Kalshi — the most legally-tested prediction-market platform — breaks down roughly as follows. Polymarket US is not a live player in most of this litigation because it remains invite-only and is not currently the target of enforcement actions. What affects Kalshi now will probably affect Polymarket US when it rolls out more widely.

Available without meaningful restriction

Roughly 42 states allow Kalshi to operate without active legal challenge as of April 2026. This includes most of the South, the Midwest, and much of the West. In these states, you can sign up, fund your account, and trade. The absence of challenge is not a guarantee — state regulators can and do change their positions — but for now these states are operationally clean.

Active state-level challenges with mixed outcomes

Six states have mounted significant legal actions:

The pattern: courts that reach preemption on the merits are splitting. Federal courts have tended to side with Kalshi on the swaps question (Tennessee, New Jersey). State courts and some federal courts have sided with state regulators (Ohio, Massachusetts at first instance, Nevada in part). The Third Circuit's April 2026 ruling was the first federal circuit decision and went Kalshi's way. The Ninth Circuit's pending ruling in the Nevada case is the one to watch — if it goes against Kalshi, the circuit split is definitive and Supreme Court review becomes highly likely.

Access currently constrained by state proceedings

In April 2026, Kalshi is not accepting new users from certain states pending litigation outcomes. The exact list rotates with the legal status of each state's proceedings — if you are in Nevada, you cannot currently trade sports-related contracts on Kalshi because of the state court injunction. If you are in Ohio, similar restrictions apply. Check Kalshi's own current state-availability page before assuming you can sign up.

The federal preemption question

At the heart of every state-level dispute is a single legal question: does the Commodity Exchange Act's grant of exclusive jurisdiction to the CFTC over transactions on designated contract markets preempt state authority to regulate those transactions as gambling?

Kalshi's argument is that Congress explicitly made CFTC jurisdiction exclusive. The statute says so in terms. A designated contract market is a federal instrument, and states cannot use their gambling-regulation authority to override that. If they could, Kalshi argues, the CFTC's entire regulatory structure would be undermined — any state could unilaterally decide which federally-approved financial products its residents could access.

The state regulators' argument is that federal preemption is narrower than that. Under the Supreme Court's 2018 ruling in Murphy v. NCAA, the federal government cannot commandeer state regulatory authority, and states retain their traditional police power to regulate gambling. The CFTC's desire for national uniformity does not satisfy the standard for preemption. And Congress, when drafting the Commodity Exchange Act, did not anticipate or authorise its use to bypass state gambling regulation — which the 2024 Loper Bright decision, removing judicial deference to agency interpretations, makes easier to argue.

Both arguments have serious force. That is why courts are splitting. The Supreme Court has not yet taken the question, but with the Third Circuit ruling for Kalshi, the Ninth Circuit expected to rule against, and additional circuit decisions pending, the split is likely to be definitive within the next six to twelve months.

The legislative angle

Congress is also engaged. On 23 March 2026, Senators John Curtis (R-Utah) and Adam Schiff (D-California) introduced the Prediction Markets Are Gambling Act. The bill would amend federal law so that sports and casino-style event contracts may not be offered on CFTC-regulated platforms. It is bipartisan, which makes it more viable than most legislation — though "viable" in the current Congress is a low bar, and the bill would still need to clear the usual committee and floor hurdles.

If the bill passes, the state-preemption question becomes moot for sports and casino contracts — the CFTC would no longer have jurisdiction, so there would be nothing to preempt. Kalshi and Polymarket US would lose the ability to offer those categories nationally. Non-sports contracts (economics, politics, entertainment, weather) would remain.

Handicapping legislation in a politically-divided Congress is unreliable. The more likely scenario is that the bill does not pass, the Supreme Court takes the preemption question, and we get a definitive federal-versus-state answer within 18 months. The direction of that answer will do more to shape the US prediction-markets industry than anything else happening right now.

What this means for you

If you are in one of the 42 states with no active challenge, the practical answer is that Kalshi is available and legal for you today. Fund an account, trade, pay federal tax on your winnings as ordinary income (prediction-market winnings are taxed as short-term capital gains or ordinary income depending on structure — consult an accountant). If you are in a state with active litigation or enforcement, your access to sports-related contracts specifically may be restricted while the legal situation develops. Non-sports contracts are less affected in most of these states.

If you are planning to hold significant positions or trade at institutional scale, the legal uncertainty is a genuine risk factor. A ruling against federal preemption could force platforms to license state-by-state, which would reduce market depth and potentially strand positions held by users in affected states. This is low-probability but high-impact. Size positions accordingly.

If you are in a state where Kalshi has restricted access pending litigation, your options are limited. Polymarket US is invite-only and does not solve the state-regulation problem even once available. Kalshi and Polymarket offshore are not legal options for US residents. Waiting for the Supreme Court question to resolve is, realistically, the plan.

For context on how the UK handles the same underlying products through a completely different regulatory lens, see our guide to whether prediction markets are legal in the UK. For a comparison of the two main US platforms, see Polymarket vs Kalshi.

Frequently asked questions

Are prediction markets legal in the US?

Yes at the federal level. CFTC-designated platforms including Kalshi, Polymarket US, Robinhood event contracts, and Crypto.com all operate legally under the Commodity Exchange Act. The complication is state-level: regulators in Nevada, Massachusetts, Tennessee, Ohio, New Jersey, and Arizona have mounted enforcement actions arguing their state gambling laws apply alongside federal regulation. Court rulings have split, the question is heading for the Supreme Court, and Kalshi is currently restricted in some states pending litigation. For most users in most states, prediction markets are accessible.

Is Kalshi legal in my state?

Kalshi is available in around 42 states as of April 2026. The states with active legal challenges are Nevada (where a state court injunction restricts trading on sports contracts), Massachusetts (the case is heading for the state Supreme Judicial Court after mixed lower-court rulings), Tennessee (Kalshi won a federal preliminary injunction), Ohio (Kalshi lost a similar motion), New Jersey (Kalshi won at the Third Circuit), and Arizona (open enforcement action). Always check Kalshi's own state-availability page before signing up — the picture changes as cases progress.

Is Polymarket legal in the US?

Yes, federally. Polymarket acquired QCEX, a CFTC-licensed exchange, in July 2025 for $112 million, and the CFTC issued an Amended Order of Designation in November 2025. The US product launched in beta in January 2026 but remains invite-only, sports-only, and mobile-only as of April 2026. The offshore Polymarket platform that processed billions in 2024 election volume is not the same product and is not legally accessible to US residents — attempting to access it violates the Terms of Use.

What is the federal preemption argument for prediction markets?

Kalshi argues the Commodity Exchange Act gives the CFTC exclusive jurisdiction over transactions on designated contract markets, which preempts state gambling laws. State regulators counter that preemption is narrower — states retain police-power authority to regulate gambling regardless of federal designation. The Third Circuit sided with Kalshi in April 2026. The Ninth Circuit's Nevada ruling is expected to create a circuit split, likely sending the question to the Supreme Court within 12 to 18 months.

Are prediction market winnings taxed in the US?

Yes. Prediction market winnings are taxable income in the US. The treatment depends on structure — short-term capital gains or ordinary income for most retail traders, depending on how the platform reports. Platforms are expected to issue 1099 forms for significant winnings. Consult a tax accountant familiar with derivatives or event-contract income for your specific situation.

How iPredicta fits in

iPredicta tracks prediction-market availability by jurisdiction. When a state changes its position on Kalshi, when a federal court rules on preemption, when the CFTC issues new guidance, when Polymarket US expands its rollout — these are the changes that materially affect which platforms you can use. We make that picture continuously current so you do not have to follow six different court dockets to know whether you can still trade.

The US prediction-markets regulatory landscape is among the fastest-moving in regulated finance right now. We cover it so you can focus on the markets themselves.