Prediction markets are a hot-button topic, not only for some of their controversial subject matter, but also because there remains no consensus on their legality.
In this comprehensive analysis, nextpredict.io/ takes a detailed look at where things stand at the state, federal and professional sports levels, as of 13 March 2026.
Prediction markets in the US operate under a contested dual-jurisdiction framework. They’re caught in debate that has been going on for well over a year in various government and regulatory panels.
Platforms like Kalshi and Polymarket are federally regulated as Designated Contract Markets (DCMs) by the Commodity Futures Trading Commission (CFTC) under the Commodity Exchange Act (CEA). This federal authorisation technically permits nationwide operations.
However, conflicts began to erupt when Kalshi started offering sports event contracts in January 2025.
This followed a DC federal court ruling in 2024 that political event contracts did not constitute ‘gaming’ under the CEA, and the incoming Trump administration’s CFTC dropped its appeal.
Multiple states argue that sports-based event contracts are functionally equivalent to sports betting and thus fall under state gambling law, a position that has produced contradictory federal court rulings.
As of March, combined weekly prediction market volume across Kalshi and Polymarket exceeds $5.9bn, with sports contracts comprising the majority of trading activity.
The legal question of whether CFTC federal preemption overrides state gaming authority is widely expected to reach the US Supreme Court.
State-by-state legal status
The table below, compiled from public sources, covers states that have taken a documented formal stance. This includes the issuance of cease-and-desist orders, lawsuits, pending legislation and court rulings, as well as states with no formal action recorded.
Federal legislative activity
Meanwhile, several bills have been introduced in Congress and state legislatures in response to the rapid growth of prediction markets. None have passed into law as of March 2026.
CFTC Advanced Notice of Proposed Rulemaking (ANPRM) — 12 March 2026
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Public Integrity in Financial Prediction Markets Act of 2026 (H.R. 7004)
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End Prediction Market Corruption Act
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Prediction Markets Security and Integrity Act of 2026
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Bipartisan Prediction Market Regulation Bill
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Sports leagues and organisations’ stances on prediction markets
The major North American sports leagues and governing bodies have taken markedly different approaches, ranging from official multi-year partnerships to firm opposition and player bans.
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Outlook
The prediction market legal landscape remains highly fluid as of March 2026. Key developments to watch include:
- CFTC ANPRM (12 March 2026) — The formal rulemaking process just launched yesterday is the most significant federal development to date. A 45-day comment window is open. Full rulemaking is expected to take months. The CFTC’s position that it has ‘exclusive jurisdiction’ directly conflicts with multiple state court rulings.
- Third Circuit ruling on NJ v. Kalshi — Will be the most consequential appellate ruling on CFTC preemption. 60+ tribes and 34 state AGs filed amicus briefs supporting NJ’s position.
- Ohio appeal — Kalshi filed 11 March after Chief Judge Morrison’s ruling calling sports event contracts categorically not ‘swaps.’ A third circuit is now weighing preemption questions.
- Michigan AG v. Kalshi (March 2026) — Polymarket immediately counter-sued, adding a new front.
- Utah HB 243 — awaiting gubernatorial signature; Kalshi’s preemption suit pending in federal court.
- Hawaii HB 2198 — If it clears the full legislature and becomes law by July 2026, it would be the first enacted state-level prediction market ban.
- Kentucky HB 904 / HB 757 — On the full House floor as of 12 March (possible vote 13 March); could force FanDuel, DraftKings, and Fanatics to choose between their state gaming licenses and their prediction market partnerships.
- US Supreme Court — Four federal appeals courts are now weighing conflicting preemption rulings. Legal analysts expect SCOTUS involvement, potentially in 2027 or 2028 unless an emergency shadow docket ruling is sought earlier.
- Blumenthal-Kim bill (12 March 2026) — Introduced the same day as the CFTC ANPRM, explicitly stating prediction markets are NOT exempt from state law, a direct legislative counter to the CFTC’s stated position.
nextpredict.io/ lead researcher Sonja Lindenberg has published a 57-page report on prediction markets and their impact on sports betting. The report is available to download for free here.