Is Prediction Markets Legal in the United States? State-by-State Guide (2026)

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Event contracts framework — the CFTC interpretation

The CFTC views event contracts as a form of binary option. Its framework generally prohibits contracts that are contrary to the public interest, involve gaming or activity that is unlawful under any state or federal law, or relate to terrorism, assassination, war, or gaming. This interpretation is a constant point of negotiation between platforms and the regulator.

The 2022 Polymarket settlement — what changed for US access

In January 2022, the CFTC settled charges with Polymarket for offering off-exchange event-based binary options without a DCM registration. The settlement order required Polymarket to pay a $1.4 million civil penalty and wind down all markets that did not comply with CFTC regulations. Crucially, Polymarket agreed to block US persons from trading on its platform, a restriction enforced via its terms of service.

The 2024 election contracts court ruling — Kalshi vs CFTC

A key legal battle unfolded in 2024 when the CFTC denied Kalshi's request to list contracts on which political party would control Congress. Kalshi challenged the decision in court, arguing the CFTC overstepped its authority. The D.C. District Court sided with Kalshi, ruling that the CFTC's denial was "arbitrary and capricious." This ruling set a significant precedent, pushing back on the CFTC's broad interpretation of what constitutes "gaming" and reinforcing the role of courts in defining regulatory boundaries.

The state-level layer — why federal isn't the whole story

CFTC approval is necessary but not sufficient. State laws, particularly those governing gambling and securities, create a second layer of complexity. A platform can be federally compliant but still restricted in certain states.

State gaming and gambling laws overlap with PMs

Many states have broad anti-gambling statutes. The core question is whether a prediction market contract is considered a game of skill or a game of chance. State attorneys general can and do interpret these laws to apply to event contracts, creating a patchwork of differing legal opinions across the country.

State Attorney General actions historical

Historically, state AGs have taken action against platforms they deem to be in violation of local gaming laws. These actions are independent of federal CFTC oversight. This is why a platform's availability can vary from one state to another, even for a federally regulated entity like Kalshi.

State-level "where is Kalshi legal" precedent

The challenge of tracking state-by-state access is not new. Outlets like Saturday Down South have created resources specifically to track where Kalshi is available, demonstrating the high demand for state-level clarity. AGON's guide expands this approach to cover Polymarket and the permissionless ecosystem.

State-by-state snapshot table

This table provides a high-level overview of prediction market access in all 50 states. Risk levels are editorial assessments based on current statutes and regulatory posture.

The high-risk states — full state restrictions

A handful of states maintain a highly restrictive posture, making them high-risk for prediction market traders.

States like Washington, Hawaii, and Georgia have historically taken a hard line, often based on broad interpretations of state gambling laws. In these jurisdictions, both regulated platforms like Kalshi and permissionless protocols face the highest legal and regulatory scrutiny. "Restricted" typically means the platform itself blocks users from that state, or that state law explicitly or implicitly prohibits the activity. Trading from these states carries significant personal legal risk.

The grey zone states — where access varies

The majority of states fall into a grey zone. Here, there is no explicit law banning prediction markets, but existing gambling or securities statutes could potentially be applied.

Common patterns in these states include outdated gambling laws written before the digital age. The legal status often hinges on whether a state's gaming commission or attorney general views prediction markets as skill-based trading or chance-based gambling. In these states, it is critical to verify the current interpretation of the law with qualified local counsel before trading.

The open states — broadly accessible

"Open" states are those with a clear regulatory environment or a history of non-enforcement against similar activities. These are typically jurisdictions where Kalshi operates without issue.

In these states, the primary legal framework defaults to the federal CFTC regulations. For users in states like California, Illinois, and Colorado, access to CFTC-regulated platforms is straightforward. However, even in these states, the status of non-regulated, permissionless protocols remains a matter of user due diligence.

Where AGON fits — the permissionless angle

How does a decentralized, on-chain protocol like AGON fit into this framework? The answer requires nuance. For a deeper dive, see our breakdown of AGON's permissionless model.

Permissionless ≠ unregulated

A common misconception is that "permissionless" means "unregulated." This is incorrect. The protocol itself is open-source code on a public blockchain. It does not have a central operator to register as a DCM. However, the activity of trading on the protocol is still subject to the laws of the user's jurisdiction. Permissionless doesn't mean a degen gets a free pass on state law.

User responsibility — geoblock policy + ToS

The responsibility for compliance falls on the user. AGON's Terms of Service require users to certify they are not in a jurisdiction that prohibits prediction market activity. While the protocol is on-chain, access via front-ends may incorporate geoblocking for high-risk jurisdictions. This reflects our commitment to a sustainable ecosystem, detailed in AGON's compliance and security posture.

Future regulatory trajectory [INFERENCE]

The regulatory landscape is moving toward greater clarity. [INFERENCE] We anticipate a future where regulators establish clearer safe harbors for decentralized protocols that meet specific criteria for transparency and user protection. This may involve a distinction between the protocol itself and the interfaces that provide access to it. The trend suggests a slow move away from blanket prohibitions toward a more risk-based regulatory approach.

Other relevant federal actions

Beyond the CFTC, other federal agencies influence the digital asset and prediction market space.

SEC interventions (token-style markets)

The Securities and Exchange Commission (SEC) has jurisdiction over instruments it defines as securities. If a prediction market involves tokens that represent a share in a platform's revenue or governance, the SEC may assert authority. This is a key reason why many platforms structure their market shares as pure information contracts, not equity-like instruments.

FinCEN AML guidance touching DeFi PMs

The Financial Crimes Enforcement Network (FinCEN) issues guidance on Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) obligations. DeFi platforms, including prediction markets, are increasingly falling under the scope of this guidance, particularly regarding know-your-customer (KYC) requirements for front-end operators.

OFAC sanctions screening

The Office of Foreign Assets Control (OFAC) maintains lists of sanctioned individuals and entities. In 2022, OFAC sanctioned the crypto mixer Tornado Cash, setting a precedent that code itself could be subject to sanctions. This action requires all US-based crypto participants, including traders on permissionless prediction markets, to ensure they are not interacting with sanctioned addresses.

Frequently asked questions

Disclaimer

AGON does not provide legal advice. The information in this article is for informational purposes only. State and federal regulations governing prediction markets, cryptocurrencies, and event contracts evolve rapidly. You must verify the current law with qualified counsel in your jurisdiction before trading.

This content is not a solicitation to trade in any jurisdiction where such activity is prohibited. AGON does not solicit US users in states where participation in prediction markets is illegal. All trading involves risk.

Last updated: August 1, 2026.

About the author

Nicolas — founder AGON Markets. Not a lawyer. This article is research and editorial, not legal advice. Always consult qualified counsel. |

Prediction markets involve risk. Not financial advice.

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Polymarket settled with the CFTC in January 2022 over offering unregistered event-based binary options to US users. As part of the settlement, Polymarket agreed to block US-based traders from its platform. Technically, the platform may be accessible from a US IP address, but its terms of service explicitly restrict US users. Some states have additional restrictions on top of this federal posture.

Kalshi operates as a CFTC-registered Designated Contract Market and is broadly accessible to US residents in most states. However, a small number of states have specific regulations that affect access. Kalshi maintains a public list of available states on its website. Our state-by-state guides provide the latest regulatory snapshot for each jurisdiction.

No US state has enacted a categorical ban on "prediction markets" by name. Instead, some states have broad anti-gaming or gambling laws that regulators may interpret to prohibit event contracts. The regulatory posture is best understood on a state-by-state and platform-by-platform basis. See our 50-state breakdown for the current snapshot.

CFTC-regulated platforms like Kalshi operate under federal commodity exchange rules as Designated Contract Markets. State-regulated prediction markets largely do not exist. Most prediction market activity is either federally regulated (CFTC), federally restricted (Polymarket post-2022), operating under a no-action letter (PredictIt), or permissionless on-chain like AGON.

AGON is a permissionless on-chain protocol on Base. It is technically accessible from a technological standpoint, but its terms of service and geoblocking posture are designed to restrict access from jurisdictions where prediction markets face legal restrictions. Users are responsible for verifying the legal status of prediction markets in their state or territory before trading.

Polymarket's terms of service restrict US-based users following its January 2022 CFTC settlement. While the platform may be technically accessible, using it from the US likely violates its terms and may carry additional state-level legal risk. For US-regulated access, traders often look to platforms like Kalshi. This is not legal advice.