Are Prediction Markets Legal in Your State? Complete 2024 Guide

February 2026: Kalshi processed $1.9 billion in college basketball trades during March Madness. A single tournament bracket contract pulled over $100 million. That same month, eleven states sent cease-and-desist orders. Five state attorneys general filed lawsuits. Kentucky passed a 17.25% tax on prediction market operators. In Ohio, a federal judge ruled the state's Casino Control Commission could fine Kalshi $5 million for operating without a license.

The confusing part? All these states are regulating the same platform. Kalshi operates under federal approval from the Commodity Futures Trading Commission. The federal government says it's legal. But your state might disagree. And even if both governments allow it, the platform itself might block you based on its own interpretation of the legal mess.

This is what understanding whether prediction markets legal by state rules allow you to use Kalshi or Polymarket from your location looks like in 2026: a platform legal under federal law faces shutdown orders in Maryland, operates under temporary court protection in New Jersey, and runs without restriction in Texas. All simultaneously.

This guide breaks down the actual regulations, not theoretical frameworks. You'll learn which platforms work in your state, which ones will close your account the moment they detect your location, and where the serious enforcement risk actually exists. If you're just getting started with these concepts, the how-to hub covers the practical mechanics of participating across different platforms.

Three Types of Platforms, Three Legal Situations

Before diving into prediction markets legal by state details, understand that not all platforms face the same legal framework. The question "is this legal in my state?" has different answers depending on which platform you're asking about.

CFTC-Regulated Platforms: Kalshi, Interactive Brokers These platforms operate under federal approval as commodity derivatives exchanges. Think of them like futures markets, but instead of trading oil or wheat, you're trading contracts on whether something happens. The federal Commodity Futures Trading Commission approved their business model. They argue federal law overrides conflicting state gambling laws.

That federal approval doesn't stop state regulators from trying to shut them down. Maryland and Ohio courts ruled state gambling laws can apply even to federally-approved platforms. Arizona, Connecticut, and Illinois are currently defending federal lawsuits from the CFTC, which claims states are illegally interfering with federal markets. Despite Kalshi legal restrictions now existing in eleven states where enforcement actions or legislation create compliance challenges, Kalshi operates in all 50 states as of April 2026, betting that federal courts will eventually rule in its favor.

Offshore Unregulated Platforms: Polymarket When people search "polymarket legal states," the answer is straightforward: Polymarket is blocked in all 50 states following its 2022 CFTC settlement. This isn't a state-by-state question. The federal government required Polymarket to stop serving American users entirely. You can't legally access it from any US state without violating the platform's terms and potentially federal commodities law. The platform uses geo-blocking technology to detect and prevent US access.

Thirty-four countries have also banned Polymarket as of 2026, including Argentina (after an inflation data scandal in March), Brazil (citing unregulated financial services), and Thailand (under securities law). Despite these restrictions, the platform still processed over $2 billion in weekly volume by late 2025, primarily from non-US jurisdictions.

Sports Betting Apps Using Prediction Mechanics: PrizePicks, Underdog Fantasy These platforms look and feel like prediction markets. You're essentially betting on whether statistical outcomes occur. But they operate under state-specific sports betting or daily fantasy sports licenses. The restrictions mirror your state's sports betting laws. If DraftKings is legal in your state, these platforms probably are too. If your state bans sports betting, you can't use them. They're similar to prediction markets in structure but follow completely different regulations.

The pattern to remember: if a platform is CFTC-regulated and avoids sports betting or political betting in restricted states, you can probably use it. But "probably" is doing heavy lifting here, because eleven states have tried to enforce gambling laws against federally-approved platforms, and courts are reaching conflicting conclusions.

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Why This Legal Mess Exists: Federal vs State Authority

The confusion comes from two different government levels claiming authority over the same activity. Understanding whether prediction markets legal by state restrictions apply requires examining both federal commodity law and state gambling statutes.

Federal Government: "These Are Commodity Markets, Not Gambling"

The Commodity Futures Trading Commission regulates what it calls "event contracts." These are essentially derivatives where the payout depends on whether something happens. A contract that pays $1 if the Federal Reserve raises interest rates is legally similar to a futures contract on wheat prices, at least according to the CFTC. Both are commodity derivatives. Both trade based on future events. Neither is gambling in the traditional sense.

In February 2024, a federal appeals court agreed with this logic in Kalshi v. CFTC (D.C. Circuit, Case No. 23-1261), which involved Kalshi's election betting contracts. The court ruled the CFTC had wrongly blocked Kalshi from offering election markets by treating them as "gaming." Judge Patricia Millett wrote the majority opinion that established CFTC-approved event contracts don't fall under gaming prohibitions. That ruling opened the floodgates. By late 2024, Kalshi offered presidential, Senate, and House race contracts. By early 2025, contracts on political candidate behavior like "Will this candidate drop out by [date]?" appeared. By 2026, roughly 90% of Kalshi's volume came from sports-related contracts.

The CFTC's current chairman, Michael Selig (appointed 2025), views prediction markets as "information infrastructure" rather than gambling. His agency has filed federal lawsuits against Arizona, Connecticut, and Illinois (April 2026), arguing these states are illegally interfering with federally-regulated markets. The legal theory: if the CFTC approved it, state gambling laws can't ban it.

State Governments: "If It Looks Like Betting, It's Betting"

Eleven states now argue that federal approval doesn't override their gambling laws. Their reasoning: if you're wagering money on sporting events or election outcomes, that's gambling regardless of what technical classification the CFTC uses. State gambling statutes exist to regulate exactly this kind of activity within state borders.

The legal authority they cite comes from the 2018 Supreme Court case Murphy v. NCAA (138 S. Ct. 1461), which gave states broad power over gambling regulation. That case struck down a federal law preventing states from legalizing sports betting. The ruling said Congress couldn't order states to maintain sports betting bans. But it also reinforced state authority over gambling within their borders, unless federal law explicitly overrides that authority.

The question courts are now wrestling with: does federal commodity law explicitly override state gambling law? Or can states regulate commodity contracts that function as bets?

Different judges are reaching different conclusions. In January 2026, Judge Algenon Marbley of the U.S. District Court for the Southern District of Ohio ruled in Ohio Casino Control Commission v. Kalshi (Case No. 2:25-cv-4392) that the state Casino Control Commission has authority to regulate Kalshi under state gambling law, even though Kalshi operates with federal CFTC approval. In February, the Circuit Court of Maryland reached the same conclusion in Maryland State Lottery and Gaming Control Agency v. Kalshi (Case No. C-03-CV-25-000847). But in March, federal judges in New Jersey (New Jersey Division of Gaming Enforcement v. Kalshi, D.N.J. Case No. 3:26-cv-1205), Connecticut (Connecticut Department of Consumer Protection v. Kalshi, D. Conn. Case No. 3:26-cv-0394), and Tennessee (Tennessee Sports Wagering Advisory Council v. Kalshi, M.D. Tenn. Case No. 3:26-cv-0286) issued temporary restraining orders preventing state enforcement while litigation continues.

Over 20 federal lawsuits are active as of mid-2026. This mess will likely require Supreme Court resolution, but that's at least 18 months away. For broader context on how these regulatory frameworks evolved, check out our prediction markets guide.

What This Means for You

If you're using a CFTC-regulated platform like Kalshi, you're operating in federal legal territory that some states are actively challenging. The platform remains accessible in all 50 states as of April 2026. But if you live in Maryland or Ohio, courts have already ruled your state can regulate the activity. If you're in Arizona, Connecticut, Illinois, New Jersey, or Tennessee, federal and state governments are currently litigating who has authority.

No individual user has been fined or prosecuted as of April 2026. The legal battles focus on whether platforms can operate in specific states, not whether users can trade. But "nobody prosecuted yet" isn't the same as "no risk."

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State-by-State Status: Where You Actually Stand

The breakdown below reflects how platforms and state regulators currently interpret the law as of April 2026, not what courts will ultimately decide. Many classifications will change as litigation resolves.

Most States: No Additional Restrictions Beyond Federal Law

For these states, prediction markets legal by state questions follow federal CFTC approval without additional restrictions. If a platform has federal CFTC approval, you can use it in these states. No state has passed legislation specifically restricting CFTC-approved prediction markets. These states have not issued enforcement actions, cease-and-desist orders, or filed lawsuits challenging federal authority.

States in this category: Alabama, Alaska, Arkansas, Colorado, Delaware, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Maine, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Texas, Utah, Vermont, Virginia, West Virginia, Wisconsin, Wyoming.

Nevada is technically in this group but has historically treated all betting as requiring state gaming licenses. As of 2026, Nevada hasn't taken enforcement action against CFTC platforms, but the state Gaming Control Board has broad authority and could change course.

States Taking Enforcement Action or Fighting Federal Authority

If you're asking "are prediction markets legal in Maryland" or "are prediction markets legal in Ohio," the answer is legally complex. Courts have ruled state gambling laws can apply despite federal approval. These eleven states have either issued cease-and-desist orders, filed lawsuits, or taken regulatory action against CFTC-regulated platforms. These Kalshi legal restrictions vary by jurisdiction, but Kalshi remains accessible in most of them as of April 2026, though enforcement risk exists.

Twenty-two states have some form of pending litigation, investigation, or legislative proposal related to CFTC-regulated prediction markets as of April 2026. The CFTC has filed federal preemption lawsuits in three states. Kalshi holds temporary court orders preventing enforcement in three states.

States with Historically Strict Gambling Laws

Louisiana, Utah, and Hawaii all have restrictive gambling statutes that could theoretically be interpreted to cover prediction markets. As of April 2026, only Hawaii has proposed specific legislation. Louisiana and Utah have not taken enforcement action against CFTC-regulated platforms. Kalshi is accessible in these states.

Washington's gambling statute includes a broad definition that technically covers any "contest of chance" for money, but the state hasn't applied this to CFTC-regulated commodity contracts. Kalshi operates in Washington without restriction.

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What Each Platform Actually Allows

How prediction markets legal by state rules affect your platform access depends on which service you're using.

Kalshi Legal Restrictions by State

Kalshi operates as a CFTC-regulated exchange with full federal approval. The platform went through years of regulatory review before launching and received what's called a Designated Contract Market license from the CFTC. This is essentially federal permission to operate as a derivatives exchange.

Where you can use it: All 50 states as of April 2026. Kalshi has not geo-blocked any state despite cease-and-desist orders and active litigation. The company's legal strategy bets on federal preemption: if the CFTC approved it, states can't prohibit it.

What you can trade: Economic indicators (Federal Reserve decisions, inflation reports, GDP numbers), weather outcomes, awards show results, political elections, and sports outcomes. In April 2026, Kalshi suspended three contracts related to political candidates dropping out after multiple states proposed anti-corruption legislation.

Requirements: You must be 18 or older with a US bank account. The platform requires identity verification using Social Security number or driver's license. Kalshi issues 1099 tax forms for users with gains over $600 per year.

Cost structure: No trading fees. Kalshi makes money on the spread, the difference between buy and sell prices. For example, if you can buy a contract for 52¢ and sell it for 48¢, that 4¢ gap is Kalshi's revenue. For detailed mechanics, see how prediction markets work.

The risk you're taking: Users in Maryland and Ohio face potential account restrictions if courts ultimately rule against federal preemption. As of April 2026, no individual user has been fined or prosecuted. The legal battles focus on whether Kalshi can operate, not whether users can trade. But the situation remains legally unsettled.

Polymarket Legal States: Why No US Access Exists

There are no polymarket legal states in the US. The platform geo-blocks all American IP addresses regardless of state gambling laws. In 2022, the platform settled with the CFTC for $1.4 million after the agency found Polymarket was operating an unregistered derivatives exchange. The settlement required Polymarket to stop serving US users entirely and implement geo-blocking technology.

Where you can use it: Nowhere in the US legally. The platform detects and blocks US IP addresses. This isn't a state-level question. The federal CFTC settlement in In re Polymarket (CFTC Docket No. 22-04) applies nationwide. Using a VPN to access Polymarket violates the platform's terms of service and potentially violates federal commodities law.

Why it's blocked: The CFTC found Polymarket failed to register as a regulated exchange, didn't implement required identity verification procedures, and allowed US users to trade on contracts the agency classified as commodity derivatives. The settlement focused on the platform's corporate entity, not individual users, but accessing the platform after being blocked potentially violates the federal order.

What happens if you bypass the block: No documented cases exist of individual users being prosecuted. The CFTC settlement targeted Polymarket's operations, not end users. But accessing an unregistered derivatives exchange violates federal commodities law. The platform actively works to detect VPN usage. When caught, accounts get closed and funds may be frozen.

Global context: Thirty-four countries have banned Polymarket as of April 2026. Argentina blocked it in March after an inflation data leak raised market manipulation concerns. Brazil banned it in January, citing unregulated financial services. Thailand blocked it in February under securities law. Despite these restrictions, the platform processed over $3.2 billion in election bets during 2024 and was trading $2 billion per week by late 2025, primarily from non-US jurisdictions.

For more comparison between Polymarket and regulated alternatives, see our Polymarket review.

Interactive Brokers (IBKR)

Interactive Brokers offers ForecastEx event contracts through its platform. IBKR operates as a licensed futures broker with CFTC approval, following the same federal regulatory framework as Kalshi.

Where you can use it: Most US states. IBKR follows the same legal structure as Kalshi, with federal CFTC approval but potential state-level challenges.

What you can trade: Primarily economic indicators like Federal Reserve decisions, unemployment reports, and inflation data. Some political election contracts. More limited selection compared to Kalshi.

Requirements: You must have an existing Interactive Brokers brokerage account, which creates a higher barrier to entry than Kal