Plenty of people have been asking, ‘Are prediction markets legal in the U.S.?’ so we’ve written this guide to tell you all you need to know. It's essential reading for anyone new to the prediction markets phenomenon.
We’ll show you why prediction markets sites are usually available in all 50 states and see how federal regulation is there to give you a safe and fair way to make your trades.
You’ll also get a crash course in how to spot legit prediction markets sites to ensure you get nothing but a quality trading experience.
- Are prediction markets legal in the US?
- Are prediction markets illegal in my state?
- How to determine whether a prediction market site is available in the US
- Understanding how prediction markets sites work
- Step-by-step guide for trading at prediction markets
- Pros and cons of using legal prediction markets sites
- Will prediction markets remain legal in the US?
- Final thoughts: Many legal prediction markets sites to choose from
- Legality of prediction markets FAQ
Are prediction markets legal in the US?
Yes, prediction markets can be enjoyed across the U.S. This is because they are regulated by the Commodity Futures Trading Commission (CFTC) at the federal level, rather than by the states.
As a result, you should be able to sign up to any of the prediction markets brands listed in the banners of this guide, safe in the knowledge that they have been approved by the CFTC to give you a secure and fair way to make your trades.
Here are just some of the things that these brands will have had to do to get that all-important CFTC approval:
| Requirement | What it means for you |
| Compliant products | All of the event contracts featured by the prediction markets brand will have been vetted by the CFTC to make sure that they are in the public interest and fall within the guidelines set by the Commodity Exchange Act. |
| Fair market conditions | The CFTC will be regularly monitoring trading activity to look for any warning signs for things like fraud, price manipulation and insider trading. |
| Financial safeguards | These prediction markets sites will have to allow open market access alongside transparent cost structures, responsible trading tools and everything else you need to stay safe when you trade. |
Are prediction markets illegal in my state?
While prediction markets are regulated on a federal level, states do have the power to decide how various brands can operate within their borders. For example, people in New York and Arizona cannot trade on any markets at Crypto.com, while customers in Nevada, Ohio, Maryland, Michigan, Illinois, Massachusetts and Illinois cannot trade any of the brand's sports markets.
Much of this is down to the tussle between federal and state regulators over how prediction markets should be regulated. This means that it’s always best to check with the prediction markets site that you are thinking of using to see whether you can actually trade its products from your state. But on the whole, you should be able to use most prediction market brands from coast to coast.
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How to determine whether a prediction market site is available in the US
Now that you know what a prediction market is, you’ll probably want to know where you should be making your trades. So the key thing to remember is that we will only be showcasing those legit prediction market sites that have CFTC regulation in the banners of this page.
As a result, you can sign up to any of our featured brands knowing that you’ll get a safe and fair way to make your trades. Here is a quick look at just some of the safety features that we looked for when it came to selecting our approved prediction markets brands:
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You can usually spot something stating that the brand has been approved as a Designated Market Contract by the CFTC in the small print at the bottom of their homepages.
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All good prediction markets sites will have industry-standard SSL encryption technologies to keep your data and deposits safe.
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You should get access to a variety of responsible trading tools that you can use to apply limits to your deposits, losses, trades, and so on.
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There should always be a robust KYC procedure in place to ensure that you correctly verify that you are of legal age to use the prediction markets site and are doing so from an approved location.
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We also carried out quick background checks on our featured prediction markets brands to make sure that they had good customer reviews. While the occasional negative review is common, if a brand had nothing but bad reviews, it was usually a big red flag.
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All prediction markets sites will have commission fees that apply to your trades, as it is their main way of staying in business. Such fees should be clearly displayed so you know exactly what charges apply, from executing your trades to making deposits and withdrawals.
Understanding how prediction markets sites work
It’s worth noting that prediction markets operate very differently from other forms of predictive entertainment, and this is reflected in their regulation.
So, here is a quick overview of the key things to understand about prediction markets:
What you can predict
You will typically be able to make your predictions on a whole world of real-life events. These should include sports, politics, elections, tech, cryptocurrencies, climate, economics, culture, and much more. Just note that certain markets that are deemed not to be in the public interest, such as terrorism and assassinations, won’t be permitted.
How the event contracts are priced
You will buy and sell event contracts that match your predictions. These event contracts will be priced between $0.01 and $0.99, depending on others' trading activity on the site. After all, you will be trading peer-to-peer rather than versus the site itself. It generally works that the more expensive contracts are those that are more likely to be proved correct.
How the event contracts are settled
Each prediction markets site will have clear rules about what counts as a correct or incorrect prediction, and you should also get indications of how the value of the relevant contract adjusts to reflect real-time developments. If your contract proves correct by the time the event settles, it will be worth $1, and you will have made a profit. However, if your prediction proves to be wrong, then you will simply lose what you spent.
How you can deposit, trade and withdraw
Don’t forget that you’ll need to make your deposits using a payment method like a card, bank transfer, e-wallet, or even crypto to fund your trades. Note that all legit prediction market sites will require you to withdraw to the same payment method to combat issues such as money laundering.
Step-by-step guide for trading at prediction markets
If you’re still not sure what event trading is, it’s probably best that we give you a quick example. Let’s take a closer look at how you could make your predictions on something like the next Super Bowl winner.
Here’s what you’d usually have to do:
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Hit any of the links for the approved prediction markets sites in the banners of this page to launch their sites from your web browser. Note that we include only brands regulated by the CFTC.
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Register your account by providing the required personal information and understand that this will be kept safe thanks to the site’s SSL encryption technologies.
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Verify your identity by producing the necessary government-issued photo ID such as your passport or driver’s license. Such know-your-customer (KYC) procedures are an essential part of being a legit prediction markets brand.
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Go to the prediction markets lobby and browse the available event contracts, knowing that the prices of these contracts are dependent on the trading activity of other customers at the site.
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Purchase your desired event contract using one of the trusted payment methods.
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Now, you can either wait until the event has settled or attempt to sell your contract early.
Pros and cons of using legal prediction markets sites
Now that you know the regulatory status of prediction markets, you may be considering making your first trades.
Here are the key pros and cons of doing so:
- Available all over the U.S.
- Fully encrypted to safeguard data and deposits
- CFTC-regulated sites offering customer protection
- Responsible trading tools available
- Potential to lose your money
Will prediction markets remain legal in the US?
That's a very good question, as there has been a real tug-of-war between federal and state regulators to determine the future of prediction markets. At the time of writing this guide, the CFTC is conducting a review to block prediction markets that aren't in the public interest, or that could be susceptible to price manipulation.
As such, you might soon find yourself unable to make predictions about things like sports injuries, and predictions about war, terrorism, and assassinations would also be off the table.
There's also expected to be an upgrade in how prediction market brands operate, with some brands moving to require users to disclose their employers. This move would be made to stave off some examples of insider trading that have rocked the prediction markets domain.
Much of what happens to prediction markets will depend on who is in power, and at the moment the administration is very permissive towards them. But should there be a change in administration, the fate of prediction markets could take a significant turn.
Final thoughts: Many legal prediction markets sites to choose from
We have shown you that prediction markets are available across the U.S., and, barring a few exceptions, you should be able to use most of our featured brands in every state. This means that you can enjoy having an entire world of real-life events to make your predictions on, and you’ll quickly understand why everyone is getting involved in prediction markets.
Looking for a place to get started today? Just click on any of the links for our recommended prediction markets brands to register your account and start trading predictions across a wide range of categories.
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Legality of prediction markets FAQ
You will typically have to be at least 18 years old to use more prediction markets sites. So, expect to complete the KYC procedure by providing a government-issued photo ID before you can start trading.
Yes, because we have checked each prediction market brand listed here to ensure it is CFTC-regulated and uses SSL encryption to keep your data and payments safe. Plus, each of these brands has taken the necessary steps to protect you from things like price manipulation.
No, as you will nearly always be expected to make a deposit of your own money and then use these funds for your trades. Plus, you have the costs of event trading to factor in, which usually include some form of commission fees.
We think brands like Kalshi, Polymarket, Crypto.com, and Robinhood offer what you should be looking for in these kinds of sites. Check the brands in the banners on this page and find your perfect prediction markets site.
