Yes, under federal law. Prediction markets like Kalshi and Polymarket run as exchanges regulated by the Commodity Futures Trading Commission (CFTC), the federal agency that oversees futures trading. The open question is whether their sports contracts also have to follow each state's gambling laws. As of October 7, 2026, two federal appeals courts say yes, one says no, and three petitions are waiting at the US Supreme Court.

For sports bettors, the result is a patchwork. The same NFL contract is live in one state, blocked in the next, and the subject of a lawsuit in a third.

Prediction markets are legal because federal law treats them as financial exchanges, not gambling sites. A sportsbook needs a license from every state it operates in. A prediction market needs approval from one federal regulator, the CFTC, and then operates under the Commodity Exchange Act (CEA), the federal law that covers futures and similar contracts. That federal status rests on how the contracts are built, because a sports contract on prediction market apps works like a simple stock, not a sportsbook bet. You buy "Yes" or "No" on an outcome, such as a team winning a game, at a price between 1 cent and 99 cents. If you're right, the contract pays $1. You trade against other users, not against the house.

The legal setup has four parts:

  1. The exchange gets federal approval -The CFTC registers the platform as a designated contract market (DCM), the same category as major futures exchanges. Kalshi received this status in November 2020 and launched in July 2021. Polymarket bought a registered exchange, QCEX, for $112 million in July 2025 and got CFTC clearance to return to US users, where it now competes with Kalshi on fees, markets, and prediction market bonuses.

  2. The exchange lists contracts on its own - A registered exchange adds a new contract by certifying to the CFTC that it follows the law. The CFTC reviews contracts after the fact but does not approve each one in advance.

  3. The CFTC holds a veto over "gaming" contracts - A section of the CEA lets the CFTC bar event contracts tied to gaming and a short list of other activities when they go against the public interest.

  4. The platforms say federal law overrides state law - Kalshi, Polymarket, and the CFTC argue that Congress gave the CFTC exclusive control over these exchanges, so state gambling laws don't apply. Lawyers call this federal preemption.

When Did Prediction Markets Start Offering Election and Sports Contracts?

Kalshi added election contracts in October 2024 and sports contracts in January 2025, on top of the economy, weather, and financial contracts it launched with in July 2021. The table below lists the court rulings and CFTC decisions that got each one there.

DateWhat happened
2023CFTC votes 3 to 2 to reject Kalshi's contracts on which party controls Congress, calling them gaming
Sept. 12, 2024A federal judge in Washington, D.C., rules the CFTC overstepped and lets Kalshi list election contracts
Oct. 2, 2024The D.C. Circuit refuses to pause that ruling, and Kalshi's election contracts go live
January 2025Kalshi self-certifies and launches sports contracts, starting with championship winners
May 2025CFTC drops its appeal in the election case
June 10, 2026CFTC proposes its first formal definition of "gaming" for event contracts

Why States Disagree

The CEA gives the CFTC power over "swaps," a type of financial contract. States argue a bet on a football game is not a swap, so their gambling laws still apply, including licensing, age limits, and taxes. The money involved explains the fight: prediction markets traded $51 billion in 2025, and sports made up about 80% of Kalshi's volume since July 2024.

Most state actions target sports contracts only, so contracts on the economy, weather, and financial markets usually stay live even in states with a court order. A few states reach further:

  • Washington's court order against Kalshi also bars election, politics, entertainment, culture, tech, science, and "mention" contracts (bets on whether a public figure says a specific word), leaving only finance, economics, climate, and commodities.

  • Arizona's criminal charges against Kalshi cover election contracts as well as sports.

  • New York's suit against Polymarket asks a court to stop it from operating in the state altogether.

  • Minnesota passed a law banning prediction markets entirely, but a federal judge blocked it before it took effect.

WSN's Expert Opinion on Prediction Markets "Legal is the wrong word to focus on here. Every major prediction market is legal under federal law. What matters to a bettor is whether a court in your state has ordered the app to block you."
Missy Macdonald
Missy Macdonald
iGaming Industry Specialist

Prediction Market Availability by State

As of October 7, 2026, courts have blocked prediction markets in 3 states: Michigan, Nevada, and Washington. Prediction markets are live in the other 47 states and Washington, D.C. In 7 of those, a court has cleared the state to enforce its laws: Connecticut, Iowa, Maryland, New York, Ohio, Tennessee, and Utah. In 10 more, a lawsuit, order, or enforcement threat is pending.

Each status shows which contracts a state action covers. When a state blocks or targets only some contracts, the cell names them, and everything else stays live.

The table below uses four statuses.

  • Available means no state block is known.

  • Contested means contracts are live, but a lawsuit, order or threat is pending.

  • At risk means a court has cleared the state to enforce its laws, with no confirmed shutdown yet.

  • Blocked means a court order requires the platform to geofence the state, which means blocking users located there.

StatePrediction MarketsWhat's driving the status
AlabamaAvailableNo state action
AlaskaAvailableNo state action
ArizonaContested (sports and election contracts)State filed criminal charges against Kalshi over sports and election contracts; a federal court barred enforcement in May, and Arizona asked the Ninth Circuit to lift that order
ArkansasAvailableNo state action
CaliforniaAvailableNo state action; tribes sued under federal tribal gaming law, and Kalshi blocks sports contracts on three reservations
ColoradoAvailableNo state action
ConnecticutAt risk (sports contracts)A federal judge refused Aug. 10 to block the state; state sued Kalshi Aug. 27 and ordered nine platforms to stop Sept. 10; CFTC sued the state
DelawareAvailableNo state action
District of ColumbiaAvailableNo state action
FloridaAvailableNo state action
GeorgiaAvailableNo state action
HawaiiAvailableNo state action
IdahoAvailableNo state action
IllinoisContested (sports and political contracts)Gaming board sent cease-and-desist letters over sports and political contracts in 2025; new law adds licensing and a 1.75% to 3.5% fee; a federal judge partly blocked enforcement Oct. 2
IndianaAvailableNo state action
IowaAt risk (sports contracts)A federal judge refused Sept. 10 to block Iowa from enforcing its gambling laws against Kalshi; Kalshi's suit also challenges Iowa's ban on election betting; a Senate bill to license and tax prediction markets stalled in the House
KansasAvailableNo state action
KentuckyContested (sports contracts)Attorney general sued Kalshi and Polymarket June 17; CFTC sued the state June 23; a 14.25% tax on operators' transaction fees starts Jan. 1, 2027
LouisianaAvailableRegulator told sportsbooks in December 2025 that sports event contracts are sports bets; no block
MaineAvailableNo state action
MarylandAt risk (sports contracts)A federal judge refused to block the state in August 2025; Fourth Circuit ruling pending; Baltimore sued Kalshi and Polymarket Aug. 13
MassachusettsContested (sports contracts)State won an injunction Jan. 20, paused since February during the appeal
MichiganBlocked (sports contracts only)Court order signed Sept. 1 requires a geofence, with a $500,000 daily fine; Robinhood agreed to close its Michigan sports contracts by Oct. 9
MinnesotaContested (all contracts)State felony ban on all prediction markets, not just sports, blocked by a federal judge July 27; the state is defending the law
MississippiAvailableNo state action
MissouriContested (sports contracts)Attorney general ordered six platforms to stop in mid-September; 30-day deadline lands Oct. 16 to 18
MontanaContestedKalshi's suit was dismissed Sept. 21 after the state agreed not to enforce until the Ninth Circuit rules on the Nevada rehearing
NebraskaAvailableNo state action
NevadaBlocked (sports, election, and entertainment contracts)Ninth Circuit ruled for Nevada Aug. 28; state courts blocked Kalshi and Polymarket
New HampshireAvailableNo state action
New JerseyAvailableKalshi won at the Third Circuit in April; state asked the Supreme Court to step in
New MexicoContestedState sued Kalshi June 4; CFTC and Polymarket sued the state
New YorkAt riskA federal judge refused July 7 to block the state; state sued Kalshi July 31 and Polymarket Sept. 24, asking a court to stop Polymarket from operating in the state entirely; CFTC ordered Kalshi to keep operating Aug. 11
North CarolinaAvailableNew budget allows CFTC-registered platforms and adds a 6% tax from Jan. 1, 2027
North DakotaAvailableNo state action
OhioAt risk (sports contracts)Sixth Circuit ruled for Ohio Sept. 25; state regulator issued a $5 million fine notice against Kalshi in April
OklahomaAvailableNo state action
OregonAvailableNo state action
PennsylvaniaAvailableNo state action
Rhode IslandContestedState sued Kalshi and Polymarket May 21; CFTC sued the state May 28
South CarolinaAvailableNo state action
South DakotaAvailableNo state action
TennesseeAt risk (sports contracts)Sixth Circuit lifted Kalshi's protection order Sept. 25, freeing the state to enforce
TexasAvailableLegislative committees are studying the issue, with recommendations due in 2027
UtahAt risk (sports contracts)Federal judge issued the first final ruling in the fight Aug. 4, holding Utah can enforce; Tenth Circuit denied emergency relief Sept. 8
VermontAvailableNo state action
VirginiaAvailableNo state action
WashingtonBlocked (sports, election, politics, entertainment, culture, tech, science, and mention contracts; finance, economics, climate, and commodities stay live)County court order bars sports, election, and most non-financial contracts since Sept. 2
West VirginiaAvailableNo state action
WisconsinContestedA federal court sided with the state in July (on appeal); CFTC and a tribe also sued
WyomingAvailableNo state action

State governments in 21 states are suing, issuing orders, or defending suits over prediction markets as of October 7, 2026. In 20 of them, prediction markets are contested, at risk, or blocked. The 21st is New Jersey, where Kalshi won in court and prediction markets trade freely while the state appeals to the Supreme Court.

Courts have blocked prediction markets in Nevada, Michigan, and Washington, with orders naming Kalshi in all three and Polymarket in Nevada. Forty-four state attorneys general also told the CFTC on July 28 that it has no authority over sports prediction markets. States lean on five tools: lawsuits, cease-and-desist letters, criminal charges, new laws, and taxes. Their core argument is that sports contracts are state-regulated gaming products, so state licensing, age, and tax rules apply.

Sports contracts draw the most action, but states attack prediction markets on seven fronts:

  • Election and political contracts: Arizona bans election wagering and charged Kalshi with 4 counts tied to election contracts. Washington's court order bars Kalshi's election and politics contracts, and Nevada's injunction against Polymarket covers election contracts.

  • Entertainment, culture, and "mention" contracts: Nevada and Washington bar entertainment contracts, and Washington also bars "mention" contracts, which pay out on whether a person says a specific word.

  • Age limits: Prediction markets accept traders at 18, while most states set 21. New York's suit against Polymarket centers on traders aged 18 to 20.

  • Consumer protection: Washington and Baltimore sued Kalshi under consumer-protection law rather than gambling law.

  • Advertising: Ohio restricts Kalshi's advertising, Minnesota's law makes advertising a prediction market a felony, and the New York City Council opened a probe into prediction-market marketing.

  • Player protections: Michigan argues Kalshi skips state rules on age verification, self-exclusion, and deposit limits.

  • Taxes and fees: Illinois adds transaction fees, Kentucky's tax on prediction markets starts Jan. 1, 2027, and New Jersey has a tax proposal pending.

The states' strongest results so far are the Ninth Circuit ruling for Nevada (Aug. 28) and the Sixth Circuit ruling for Ohio and Tennessee (Sept. 25). The Sixth Circuit went further than any other court: it held that even if the contracts are swaps, the CEA does not override state gaming law.

Other actions sit outside state government. Tribes in California, Wisconsin, and New Mexico have sued Kalshi under the Indian Gaming Regulatory Act, and the Ninth Circuit ruled for two California tribes, the Blue Lake Rancheria and the Chicken Ranch Rancheria. Baltimore sued Kalshi, Polymarket, and three other operators under consumer-protection law in August. Arkansas, Louisiana, and Texas have issued opinions, notices, or studies without action against any prediction market.

The 21 states are listed alphabetically below, each with a short account of how the dispute got there. Kalshi and Polymarket come up most often because states name them in more lawsuits and orders than any other platform.

Arizona

Arizona is the only state to file criminal charges against a prediction market, but a federal court has frozen the case. In March 2026, AG Kris Mayes charged Kalshi with 20 misdemeanors in Maricopa County: 4 tied to election contracts, which Arizona law bans, and 16 tied mainly to sports contracts. The CFTC sued Arizona in April, and on May 5 a federal judge barred the state from enforcing its laws against CFTC-registered exchanges. Arizona's gaming regulator had already sent Polymarket a cease-and-desist in Dec. 2025.

After the Ninth Circuit ruled for Nevada on Aug. 28, Mayes asked the same court to throw out Arizona's injunction, arguing the Nevada ruling now controls. That request is pending.

Connecticut

Connecticut moved from warnings to lawsuits in 2026. The CFTC sued the state in April to stop it from enforcing its gaming laws against federally registered exchanges. In August, a federal judge refused to shield Kalshi, and the state sued Kalshi in state court later that month; Kalshi has appealed the federal ruling to the Second Circuit. On Sept. 10, Gov. Ned Lamont announced cease-and-desist orders against nine more platforms, including Polymarket, Coinbase, Crypto.com, and Robinhood, plus 29 subpoenas.

The CFTC asked a federal court on Sept. 11 to block those orders. That request and Kalshi's Second Circuit appeal are both pending.

Illinois

Illinois went after prediction markets first through its regulator and then through a new law. The Illinois Gaming Board sent cease-and-desist letters to Kalshi, Crypto.com, and Robinhood over sports and political contracts, and to Polymarket on Jan. 27, 2026. The CFTC sued Illinois in April. The state then passed SB 3019, which requires a state license and charges transaction fees, and Kalshi sued before it took effect on July 1.

On Oct. 2, Judge Martha Pacold blocked SB 3019's licensing and criminal provisions for Kalshi, Coinbase, and the CFTC, but left the fees unresolved. The ruling does not cover Polymarket. Proposed injunction terms are due Oct. 29.

Iowa

Iowa has never filed enforcement against a prediction market, but Kalshi sued the state in March 2026 after officials declined to rule it out. In September, a federal judge refused to block Iowa's attorney general and Racing and Gaming Commission from enforcing state gaming law, leaving the state free to act. Iowa's next filing is due Nov. 9.

Kentucky

Kentucky is fighting prediction markets through both a tax and a lawsuit. The state enacted a 14.25% excise tax on prediction-market transaction fees, starting Jan. 1, 2027, and its attorney general sued Kalshi and Polymarket in state court on June 17. The CFTC then sued Kentucky, and argument in that case is set for Oct. 9.

Maryland

Maryland was one of the first states to win in court against a prediction market. Kalshi sued to block Maryland's gaming law, and in Aug. 2025 a federal judge refused. Maryland's gaming regulator followed with a warning on prediction markets in Nov. 2025. Kalshi's appeal reached the Fourth Circuit, which heard argument on May 7, 2026. No ruling has come yet, and when it arrives, it becomes the fourth federal appeals decision on the issue.

Massachusetts

Massachusetts was the first state to sue a prediction market over sports contracts. AG Andrea Campbell sued Kalshi in state court in Sept. 2025, and in January 2026 a Superior Court judge issued the first court order of its kind, telling Kalshi to geofence the state. The judge then paused the order while Kalshi appealed. Polymarket sued the attorney general in federal court in February; that case is on hold.

The Supreme Judicial Court heard the appeal on May 4, and reports describe the justices as skeptical of Kalshi. No ruling has come yet.

Michigan

Michigan is one of three states where a court has blocked a prediction market, with its order aimed at Kalshi. AG Dana Nessel sued Kalshi under state sports-gaming law on March 5, 2026. A temporary order halted Kalshi's sports contracts in June, and on Sept. 1 an Ingham County judge replaced it with a preliminary injunction: Kalshi must geofence Michigan or pay $500,000 per day. In July, the CFTC used emergency powers to order Kalshi to fulfill open trades with Michigan residents, overriding a state court order to cancel them. By then, Kalshi had already unwound those trades to comply with the court, leaving it caught between conflicting state and federal orders.

Michigan has not sued Polymarket. Polymarket sued Michigan the day after the state sued Kalshi, but a federal judge refused to block the state in March. The Kalshi case now moves toward final judgment.

Minnesota

Minnesota passed the first state law that makes hosting or advertising a prediction market a felony. The ban was signed on May 18, 2026. Kalshi and Polymarket sued, and on July 27 Judge Katherine Menendez blocked the law before it took effect. A pretrial conference is set for Oct. 13.

Missouri

Missouri skipped the courts and went straight to orders. On Sept. 18, 2026, AG Catherine Hanaway sent cease-and-desist letters to Polymarket, Kalshi, Crypto.com, Novig, Underdog, and Robinhood, arguing their sports contracts are unlicensed sports gambling under Missouri law. Hanaway said any operator must hold a state license, pay state taxes, and keep out users under 21. The letters gave 30 days to comply, so the deadline falls about Oct. 18, and Hanaway warned that noncompliance triggers enforcement.

Montana

Montana is on pause. Kalshi sued in April 2026 after Montana ended a standstill agreement, and a federal judge refused to block the state in August. On Sept. 17, both sides agreed to drop the case, and Montana agreed not to enforce until the Ninth Circuit finishes the Nevada appeal, plus 30 days' written notice. The court dismissed the case on Sept. 21.

Nevada

Nevada is the only state where courts have blocked two prediction markets, Kalshi and Polymarket. State courts granted preliminary injunctions against Kalshi in April 2026 and against Polymarket on May 29, the latter covering sports, election, and entertainment contracts. Kalshi's federal protection ended on Aug. 28, when the Ninth Circuit ruled 3 to 0 that its sports contracts are likely not swaps.

Kalshi has asked the full Ninth Circuit to rehear the case, or to wait for new CFTC rules; Nevada opposes. Robinhood and Crypto.com have taken their Nevada losses to the Supreme Court, and Nevada's responses are due Oct. 14 and 15.

New Jersey

New Jersey is the only state where a federal appeals court has ruled for prediction markets, in a case Kalshi brought. Kalshi sued after New Jersey moved to apply its gaming laws, and on April 6, 2026, the Third Circuit ruled 2 to 1 that its sports contracts are likely federally regulated swaps beyond the reach of state law. The ruling protects prediction markets in every state the Third Circuit covers: New Jersey, Pennsylvania, and Delaware. On Sept. 2, AG Jennifer Davenport asked the Supreme Court to reverse (Flaherty v. KalshiEX, No. 26-299), and Kalshi's response is due Nov. 9. A 9% net-income tax on prediction markets is expected back before the legislature this fall.

New Mexico

New Mexico sued Kalshi on June 4, 2026. Polymarket responded on June 30 by suing the state's attorney general and Gaming Control Board, arguing it faced imminent enforcement, and the CFTC has also sued New Mexico.

New York

New York is suing two prediction markets while the CFTC tells one of them, Kalshi, to keep running. Kalshi sued the state first, and a federal judge denied its injunction on July 7, 2026. AG Letitia James then sued Kalshi on July 31, seeking more than $36 billion. The CFTC answered on Aug. 11 with an emergency order directing Kalshi to keep operating in New York, which James has asked a federal court to disregard. On Sept. 24, James and Gov. Kathy Hochul sued Polymarket US over traders aged 18 to 20, and Polymarket countersued in federal court.

State lawmakers have also proposed the ORACLE Act, which sets out to regulate prediction exchanges and ban certain contracts; it has not passed.

Ohio

Ohio's fight with prediction markets started over a license and a fine against Kalshi. A federal judge refused in March 2026 to block Ohio's gaming laws, and in April the Ohio Casino Control Commission proposed a $5 million fine against Kalshi for unlicensed sports gaming, citing Ohio's 20% gaming tax, age verification, and advertising rules. Kalshi sued in state court, arguing the fine violates its right to a jury trial. On Sept. 25, the Sixth Circuit upheld the March ruling, holding that Kalshi's contracts are not swaps and that federal law does not override Ohio law even if they are.

Ohio then widened its focus. On Oct. 2, the commission sent cease-and-desist letters to 10 other operators, including Polymarket, with 14 days to respond. Kalshi's deadline to seek rehearing is Oct. 9.

Rhode Island

AG Peter Neronha sued Kalshi and Polymarket on May 21, 2026, and Kalshi countersued. The CFTC moved to join the case on May 28, and the case is pending.

Tennessee

Tennessee was among the first states to order prediction markets out. On Jan. 9, 2026, its sports-gaming regulator ordered Kalshi, Polymarket, and Crypto.com to stop offering sports contracts. Kalshi won a federal injunction in Nashville on Feb. 19, but the Sixth Circuit vacated it on Sept. 25 in the same ruling that went against Kalshi in Ohio. Kalshi's injunction ends once that ruling formally takes effect, about Oct. 16 if Kalshi does not seek rehearing.

Utah

Utah's governor and attorney general pledged to stop prediction markets, and Kalshi sued pre-emptively in Feb. 2026. A federal judge ruled on Aug. 4 that federal law does not override Utah's gaming laws, and the Tenth Circuit denied Kalshi emergency relief on Sept. 8. Utah is now free to enforce but has not filed an enforcement action, and Kalshi's Tenth Circuit appeal is pending.

Washington

Washington is one of three states where a court has blocked a prediction market, and its order against Kalshi reaches far beyond sports. The state's Gambling Commission warned in Dec. 2025 that event contracts are not authorized, and AG Nick Brown sued Kalshi under consumer-protection law on March 27, 2026. A King County judge issued a preliminary injunction in July, then amended it on Aug. 12 to bar sports, election, politics, entertainment, culture, tech and science, and "mention" contracts, with a $120,000 daily penalty for missed deadlines. Finance, economics, climate, and commodities contracts stay. The geofencing deadline passed on Sept. 2, and the judge denied Kalshi's request to reconsider on Sept. 18. Polymarket is not named.

Wisconsin

AG Josh Kaul sued Kalshi, Polymarket, and three other operators in Dane County on April 23, 2026. The CFTC asked a federal court to block the state, but Judge William Griesbach denied that request in July. The CFTC has appealed to the Seventh Circuit, and the next filing there is due Oct. 21.

What is the CFTC doing about it?

The CFTC is defending its exclusive authority in court while writing the first rules on which contracts are allowed. It has sued nine states, used emergency powers to keep Kalshi running over state orders, and sent two new rules to White House review on Sept. 28.

On enforcement, the agency (chaired by Michael Selig) has sued Arizona, Connecticut, Illinois, Kentucky, Minnesota, New Mexico, New York, Rhode Island, and Wisconsin, arguing the CEA overrides their enforcement. It won an injunction in Arizona in May 2026 and a partial one in Illinois on Oct. 2.

The rulemaking is the part that decides what you can trade. The proposed rule of June 10, 2026 defines "gaming" and sets a three-step test for event contracts. Broad sports contracts stay permitted under the proposal: final scores, point spreads, season-long stats, and tournament advancement. Contracts tied to injuries, officiating, single in-game plays, altercations, and pre-college events face a ban. The comment window closed July 27.

The CFTC's non-sports work centers on elections and market integrity. Election contracts have traded federally since a 2024 court ruling cleared Kalshi to list them, and the CFTC dropped its appeal in May 2025. On Sept. 22, 2026, CFTC staff flagged "mention" contracts, which pay out on whether a person says a specific word, as open to manipulation. The agency is also prosecuting insider trading on these markets, and Congress is weighing the McCormick-Gillibrand Prediction Market Act of 2026 (S. 4469), which targets insider trading by officials.

DateCFTC action
Sept. 28, 2026Sends two rules to the White House: one defining "swap" to include event contracts, one excluding traditional gaming products such as slots and table games. Texts not public; neither in force
Sept. 22, 2026Staff guidance flags "mention" contracts as open to manipulation
Aug. 11, 2026Uses emergency powers to order Kalshi to keep operating in New York
July 24, 2026Second advisory of the year against broad, template-style self-certifications
July 14, 2026Orders Kalshi to settle open Michigan trades, overriding a state order
June 10, 2026Proposes the "gaming" definition and three-step test

The agency is also prosecuting insider-trading cases, including one against a US soldier charged over Polymarket trades tied to a US military operation involving Venezuela's Nicolás Maduro. The soldier has moved to dismiss, arguing the contracts were not swaps.

How It Will All End Up

The Supreme Court is positioned to settle it, and three petitions are already pending. None has been acted on, and the earliest a ruling arrives is June 2027 if the Court takes a case this term.

Where the Courts Stand (October 7, 2026)

Three federal appeals courts have ruled, two more issued emergency orders only, and three cases are still waiting for a decision.

CourtCaseResultDate
Third CircuitNew JerseyFor Kalshi: sided with the platform at the early injunction stageApril 2026
Ninth CircuitNevadaFor the state, 3 to 0: sports contracts are likely not swaps, so state law applies. Kalshi asked the full court to rehear itAug. 28, 2026
Sixth CircuitOhio and TennesseeFor the states: not swaps, and state law applies either way. Kalshi's deadline to ask for a rehearing is Oct. 9Sept. 25, 2026
Fourth CircuitMarylandArgued May 7; no rulingPending
Second and Tenth CircuitsNew York; UtahEmergency requests only, both against Kalshi2026
Seventh Circuit (lower courts)Illinois; WisconsinIllinois for Kalshi, the CFTC, and Coinbase (Oct. 2); Wisconsin for the state (July), on appealPending
Massachusetts Supreme Judicial CourtMassachusettsArgued in May; no rulingPending

The Supreme Court Petitions

Each petition asks the Court to settle whether federal law stops states from regulating sports contracts on CFTC-registered exchanges:

  1. New Jersey v. KalshiEX (No. 26-299). New Jersey filed Sept. 2 after losing at the Third Circuit. Kalshi's response is due Nov. 9.

  2. Robinhood Derivatives v. Dreitzer (No. 26-338). Robinhood filed Sept. 10, challenging the Ninth Circuit's Nevada ruling. Nevada's response is due Oct. 14.

  3. Crypto.com v. Nevada (No. 26-344). Nevada's response is due Oct. 15.

The Court typically considers a petition a few weeks after the response arrives. If it agrees to hear a case this term, arguments take place in late winter or spring.

What Happens Next?

There are five realistic outcomes:

  • The Court takes a case - A ruling settles the split nationwide. Until then, states in the Ninth and Sixth Circuits enforce, and states in the Third Circuit do not.

  • The Court declines - The split holds, and access follows the map by circuit.

  • The CFTC rules land - New federal rules reshape which contracts are allowed, though Nevada argues the Ninth Circuit's holding rests on the statute's text and a rule change does not move it.

  • Congress acts - Senator Schiff's Prediction Markets Are Gambling Act (S. 4160) targets sports and other gaming-style contracts; the McCormick-Gillibrand Prediction Market Act of 2026 (S. 4469) targets insider trading by officials. Both sit in committee.

  • Platforms adapt - Operators obtain state gaming licenses for some activity, pull specific contracts in specific states, or keep running mainly under federal rules.

WSN's Expert Opinion on the Future of Prediction Market Rulings "Expect the map to keep shifting until the Supreme Court rules. For bettors in Ninth and Sixth Circuit states, sports contracts face the highest risk of shutdown orders, while New Jersey, Pennsylvania, and Delaware are the most protected."
Bryan Zarpentine
Bryan Zarpentine
Sports Betting Analyst

This timeline tracks every major legal, regulatory, and industry event for prediction markets in the US, newest first, through October 7, 2026. It covers court rulings, state lawsuits, cease-and-desist orders, new state laws and taxes, CFTC actions, and bills in Congress.

Prediction market law changes weekly, and a single court order can change what traders in a state can access overnight. We update this timeline as new filings, rulings, and orders come in. Each entry gives the date and what changed, so you can see how the current map took shape and what moved most recently.

  • Oct. 2, 2026 - Judge Martha Pacold (N.D. Ill.) granted in part the preliminary injunction motions from Kalshi, Coinbase, the United States and the CFTC. Illinois cannot apply its sports-wagering licensing rules or related criminal provisions to the Kalshi-listed contracts at issue (championship-winner contracts). She found those contracts are likely swaps and held off on the challenge to Illinois' new 1.75% to 3.5% transaction fees. The parties must submit a proposed injunction by Oct. 29. This conflicts with the July Wisconsin ruling now before the Seventh Circuit, and it is a rare district-court win for the federal side after the Sixth Circuit loss. (source: N.D. Ill. order via CourtListener)

  • Early Oct. 2026 - Nevada, through Mayer Brown's Nicole Saharsky, told the Ninth Circuit not to delay ruling on Kalshi's en banc petition. Nevada argued the panel's no-swaps holding rests on the CEA's text, so a revised CFTC rule would not change the outcome.

  • Sept. 28, 2026 - OIRA received two CFTC submissions. RIN 3038-AF82 is a proposed rule, "Further Definition of 'Swap' to Include Event Contracts." RIN 3038-AF81 is an interim final rule, "Further Definition of 'Swap' to Exclude Casino-Style Gambling Products." Neither text has been published, and neither is in effect. (source: Reginfo.gov)

  • Sept. 25, 2026 - Kalshi sent a letter to the Ninth Circuit asking it to grant en banc rehearing in the Nevada case, or to hold the petition until the CFTC revises 17 CFR 40.11. The CFTC has said that revision is coming "within the next two months."

  • Sept. 25, 2026 - A unanimous Sixth Circuit panel ruled against Kalshi in consolidated appeals KalshiEX v. Schuler (Ohio) and KalshiEX v. Orgel (Tennessee). It held that Kalshi has not shown its sports contracts are swaps, and that even if they were, the CEA would not preempt either state's gambling laws.

  • Sept. 24, 2026 - New York AG Letitia James sued Polymarket in state court, alleging an unlicensed gambling operation and seeking an injunction, disgorgement, restitution and civil penalties. The same day, Polymarket sued James and other state officials in Manhattan federal court to block state regulation, arguing federal preemption. The AG's suit follows New York's July suit against Kalshi.

  • Sept. 22, 2026 - The Supreme Court granted Kalshi's request for a 30-day extension in Flaherty v. KalshiEX, moving its brief in opposition from Oct. 8 to Nov. 9. Kalshi filed the request on Sept. 18.

  • Sept. 22, 2026 - The CFTC's Division of Market Oversight issued a staff advisory saying contracts on what a named person says, attends or does may be presumed readily susceptible to manipulation. Exchanges will have to justify their safeguards contract by contract. It is not a rule or a ban.

  • Sept. 21, 2026 - Kalshi petitioned the Seventh Circuit (No. 26-8020) for permission to appeal the Wisconsin ruling that lets the Ho-Chunk Nation's IGRA claims proceed. This follows the district court's Sept. 11 certification.

  • Sept. 21, 2026 - The federal court in Montana entered an order dismissing KalshiEX v. Knudsen, on a joint stipulation filed Sept. 17. Montana agreed not to enforce against Kalshi's event contracts until the Ninth Circuit resolves the en banc petition in the Nevada case, and to give 30 days' notice before acting after that.

Responsible Trading

Trading event contracts carries real financial risk, and the main consumer-protection body treats it seriously. The National Council on Problem Gambling (NCPG) calls the activity "functionally gambling, regardless of how it is legally defined" and recommends a minimum age of 21, spending limits, and visible helpline access. The National Problem Gambling Helpline is 1-800-MY-RESET (call or text; chat at 1800myreset.org).

Four facts stand out for anyone moving over from state-licensed operators:

  • Age gap - Prediction markets allow traders 18 and older, while most state-licensed operators require 21. The NBA, PGA Tour, and NCAA have asked for a 21 minimum.

  • Fewer state protections - Michigan's regulator argues Kalshi operates outside state rules on age verification, self-exclusion, and deposit limits.

  • Financial framing - NCPG warns that words like "trading" and "positions" lead some people who never think of themselves as gamblers to miss the warning signs.

  • Frequency risk - Research cited by NCPG finds weekly traders report problem indicators at roughly twice the rate of the general population.

Kalshi offers trading breaks, permanent self-exclusion, monthly deposit limits, mental health support through Birches Health and two-factor authentication. Polymarket has no built-in responsible trading tools, so users set their own limits.

If trading stops being fun, free and confidential help is available. Call or text the National Problem Gambling Helpline at 1-800-MY-RESET, or chat at 1800myreset.org. Other support groups include Gamblers Anonymous, Gam-Anon for family members, and SMART Recovery.

Are Prediction Markets Legal FAQ

Are prediction markets considered gambling?

Who regulates prediction markets?

Do prediction markets need a state license?

Is Polymarket legal in the US?

Are prediction markets legal in states without legal sports betting?

Are election contracts legal?

Do state bans cover politics and other non-sports contracts?

How old do you have to be to use a prediction market?

Are prediction market winnings taxable?

What happens if the Supreme Court sides with the states?

Can prediction market users be prosecuted?

Is Kalshi Legal in California?
Is Kalshi Legal in California? 1 week ago | Bryan Zarpentine
Is Kalshi Legal in Texas?
Is Kalshi Legal in Texas? 1 week ago | Bryan Zarpentine
Is Kalshi Legal in New York?
Is Kalshi Legal in New York? 1 week ago | Bryan Zarpentine
Is Kalshi Legal in Florida?
Is Kalshi Legal in Florida? 1 week ago | Bryan Zarpentine
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