Are prediction markets legal? That is a popular question that many US users have, and today, we are answering that question with this prediction market guide. To answer that all-important question, yes, prediction markets are legal in the USA.
As long as prediction markets are licensed and regulated by the Commodity Futures Trading Commission (CFTC), you can sign up at these platforms and buy and sell contracts on several future events, including sports events and pop culture. This guide unpacks the legal framework for prediction markets and explains how to make trades at these sites.
Please note that while we do use terms like ‘bets’ and ‘betting’, you cannot place bets when using prediction markets. Instead, you can trade on the outcome of future events by buying or selling shares/contracts.
If you are wondering
what is a prediction market, these are online trading platforms. Legal prediction markets are platforms where you can trade on the outcome of future events, primarily in the form of binary outcomes (yes or no). Prediction market contracts range from $0 to $1. When using legal prediction markets in the US, you can purchase shares or contracts on the outcome of an event (such as sports, pop culture and politics) that you expect to occur. A contract can only be made if there are enough trades for both sides of a specific outcome.
Prediction markets
do not set their own contracts; instead, the value of each contract is calculated by the trades made by other users on the likelihood of an event occurring. The higher the price, the more likely traders think an event will occur.
For example, if the LA Dodgers are trading at $0.55 to make the MLB Playoffs, it means that traders think that there is a 55% chance of the Dodgers qualifying for the Playoffs. If you believe that the Dodgers will qualify for the Playoffs, you can buy a ‘Yes’ contract for that outcome at $0.55. If you purchase a ‘Yes’ position for $100, you will receive 181.81 contracts ($100/0.55). If the Dodgers qualify for the Playoffs, you will win $181.81 ($81.81 in profit). However, if the Dodgers do not qualify for the Playoffs, you will lose $100.
Are Prediction Markets Legal in the US?
Yes. The debate surrounding prediction markets is well-documented, but there have been significant inroads into legalizing these platforms in recent years. In the US, all US legal prediction markets must be licensed by the Commodity Futures Trading Commission (CFTC). The CFTC is an independent US regulatory agency that oversees the commodity futures, options, derivatives and prediction markets.
While prediction market
Kalshi is legal
and has the necessary documentation and certification from the CFTC, licensing information for other platforms was not as straightforward.
For example, in our ‘Is Polymarket Legal’ guide, we explained how the CFTC banned the platform and how Polymarket has finally obtained the necessary regulations after acquiring a CFTC-licensed exchange, thus utilizing that exchange license to operate in the US.
Types of Future Events You Can Trade on at Legal Prediction Markets in the US
When you join US legal prediction markets, you can buy and sell contracts on various future events, including pop culture, sports, elections and political events. When trading on these platforms, depending on the market volume and liquidity, you can buy and sell contracts before the outcome of the contract is finalized.
By doing so, you can lock in any profits or minimize your losses if you know that your initial position is going to lose. However, you must be cautious if you are selling a contract with low volume, as there may not be sufficient contract liquidity, and you will struggle to close out your position quickly, risking adverse selection.
We have shared a table with some of the available future events at legal prediction markets:
Future event
Contract example
Sports events
You can buy and sell contracts on specific global sporting events. For example, will Brazil win the 2026 FIFA World Cup?
Politics/Economy
Purchase shares on what political decisions will be announced. For example, what will the Fed decision be in December?
Elections
Election contracts can be bought for domestic and global elections, such as who will be the US presidential election winner in 2028.
Culture
Contracts can be traded on all pop culture and entertainment events, such as Oscars award show winners and whether a specific artist will top the Spotify list for the year.
Conclusion – Stop Wondering Whether Prediction Markets Are Illegal
You don’t need to wonder about the legality of prediction markets in the US, as we have covered the legal framework of these trading platforms. As we discussed, you should only be using prediction markets that are licensed and regulated by the CFTC. When using these CFTC-licensed US legal prediction markets, ensure that you also submit your KYC documents so that your account is verified and you can successfully withdraw your successful trading winnings.
If you need help finding prediction markets that are legal in the US, click any of the relevant banners on this page to join our list of legal platforms. Remember to be responsible with your trades and conduct thorough research on all contracts.
Explore These Event Prediction Markets
Are Predictions Markets Legal FAQs
Yes. All US legal prediction markets must be licensed by the Commodity Futures Trading Commission (CFTC).
If you are 18 or older, please double-check that the prediction markets on this page are available in your state. If available, click the relevant banners to sign up. Thereafter, you can make a deposit and start buying and selling contracts on various future events.
Yes. All legal prediction markets in the USA require registered traders to submit their KYC documents for player account verification. Ensure that your proof of ID is a clear copy and reflects the same details as you used when joining the prediction market.
