Are Prediction Markets Legal? Quick Answers by Country and State in 2026

The short answer: it depends entirely on where you live. Prediction markets are fully legal at the federal level in the United States, restricted to licensed platforms in the United Kingdom, mostly blocked across Europe, banned in Australia and New Zealand, and operate in grey areas across most of Asia and Latin America. A platform that is perfectly legal for someone in Brazil may be illegal for their friend in France using the exact same product.

This guide gives you a direct answer for your jurisdiction, explains what the legal risks actually are for you as a user (not as an operator), walks through age requirements and KYC, covers tax implications, and answers the practical questions people ask when they are considering using Kalshi, Polymarket, or similar platforms for the first time. For a deeper policy-level look at the regulatory landscape with court cases and jurisdictional analysis, see our prediction markets regulation guide.

Prediction Market Legality by Jurisdiction

Every jurisdiction that has taken a position, with the legal basis and the date it last moved. Indented rows under the United States are individual states, where the dispute is about sports event contracts rather than prediction markets as a whole.

• United States: Legal federally. Some sports contracts restricted in specific states. Access to CFTC-regulated platforms (Kalshi, Polymarket US, DraftKings Predictions, Robinhood Predictions, OG by Crypto.com) is legal nationwide for non-sports contracts

What the Statuses Actually Mean for You

The four labels in the table are not interchangeable, and the practical distance between them is bigger than the wording suggests. What follows is what each one means for you as a user, not for an operator.

Legal means a national or federal authority has a framework and the platforms you would use are authorised under it. You can deposit, trade and withdraw without breaking the law, your identity gets verified, and there is a regulator to complain to. It does not mean every contract type is available: the United States is legal federally while several states restrict sports contracts specifically, which is why the state rows sit underneath.

Licensed only is the trap most people fall into. The product itself is lawful, but only through an operator that holds a local licence. In the United Kingdom that means Matchbook Predictions or Betfair Predicts. Reaching Kalshi or Polymarket from a UK address breaks both the platform terms and gambling law, and the fact that the page loads for you is not evidence of anything.

Grey area means no framework and no enforcement, which is not the same as permission. Nobody has ruled, so nobody has ruled in your favour either. A grey jurisdiction can turn into a blocked one with a single announcement, and it usually does so without a transition period: South Korea moved from grey to blocked in August 2026 after a wave of election contracts drew attention. Money already on the platform is the part that hurts.

Banned and Blocked differ only in method. Banned means a regulator has ruled the activity unlawful. Blocked means it has also instructed providers to cut off access, as Australia did through ISP-level filtering. In both cases the enforcement is aimed at the operator rather than at you, so the realistic consequence is not prosecution but a closed account and funds held for months.

One thing the table cannot tell you: how recently anyone checked. The Last change column is the honest version of that. A row dated 2025 means the position has held for a while. A row dated within the last quarter means the ground is still moving.

Legal status varies fundamentally by country, and prediction markets fit differently into each country’s gambling regulatory framework. For the comprehensive breakdown of how major jurisdictions approach online gambling and prediction markets together, see our global iGaming regulation overview.

What Happens If You Use a Prediction Market Illegally

This is the question most users actually care about. The legal risk varies dramatically by jurisdiction.

Criminal prosecution: extremely rare

Very few users have been criminally prosecuted for using prediction markets in jurisdictions where the platforms themselves are prohibited. Enforcement is almost universally directed at operators, not individual users. The main exception is jurisdictions with aggressive anti-gambling criminal statutes (Singapore, China, some Middle Eastern countries), where use of any unlicensed gambling platform carries criminal liability.

Civil penalties: platform-level, not user-level

Regulatory actions in the US, UK, EU, and Australia have targeted platforms (Polymarket’s $1.4M CFTC fine in 2022, cease-and-desist orders, ISP blocks). Individual users have not been fined or penalized in any major jurisdiction as of April 2026.

Account closure and frozen funds: real risk

The most common real consequence is account closure and frozen funds. If you use a VPN to access a platform that geoblocks your country, and the platform later detects this through KYC, IP analysis, or banking data, your account may be closed. Funds in your account may be delayed or returned, but the process can take months.

Tax complications: jurisdiction-specific

Using a platform that is technically illegal in your country does not exempt you from tax reporting obligations. If you make money on Polymarket while living in France (where it is prohibited), you still owe French tax on the income. The tax authority does not care about the legal status of the platform, only about your income. This creates a double risk: violating gambling law plus potentially evading tax.

Banking relationships

Some banks in restrictive jurisdictions flag transactions to prediction markets as potentially suspicious, especially for crypto-based platforms like Polymarket. This can trigger bank account reviews or (rarely) account closures. The risk is higher for large transaction volumes.

Using a VPN: Does It Make Prediction Markets Legal?

No. Using a VPN to access a prediction market from a jurisdiction where it is illegal does not make the use legal. It may make detection harder, but the underlying legal violation is unchanged.

Three practical points to understand:

1. VPN use violates platform terms. Every major prediction market’s terms of service prohibit VPN circumvention of geoblocking. If detected, your account will be closed and funds may be held. Polymarket’s Section 2.1.4 explicitly prohibits it
2. Detection is improving. Platforms use IP analysis, banking data, KYC verification, and behavioral patterns to detect VPN use. Detection rates in 2026 are significantly higher than in 2024
3. Enforcement risk is primarily at the platform level. Individual users rarely face prosecution, but the account closure and frozen funds risk is real

The honest answer: people do use VPNs to access prediction markets in restricted jurisdictions. The risk is real but mostly financial (losing access, losing funds) rather than criminal.

Age Requirements and KYC

Prediction markets have lower age requirements than some traditional US gambling products in most jurisdictions, but this varies by platform and jurisdiction.

• US (Kalshi, Polymarket US, DraftKings Predictions, Robinhood Predictions): 18+ required
• UK (Matchbook Predictions, Betfair Predicts): 18+ required (UKGC standard)
• Polymarket International: 18+ required in platform terms, with KYC for US-adjacent users. Age verification is lighter in non-US jurisdictions

KYC (Know Your Customer) requirements vary:

• CFTC-regulated platforms require identity verification with government-issued ID before funding or withdrawing
• UK-licensed platforms require UKGC-standard identity checks
• Polymarket International uses permissionless wallet onboarding but tightened wallet monitoring in 2026 after Nevada regulatory actions. High-volume traders typically face additional due diligence regardless of platform

Are Your Funds Protected?

Segregation is not insurance. Kalshi balances are held in segregated accounts separate from company operating funds, which is required under CFTC rules. This is good, but it is different from FDIC or SIPC cover. SIPC explicitly does not protect cash held in connection with commodities trades, and Kalshi is not an FDIC-insured bank. If a platform fails, fund recovery goes through bankruptcy or regulatory receivership rather than insurance. For most users the distinction does not matter, because CFTC-registered DCMs carry strong operational requirements. It matters before you deposit an amount you would struggle to lose.

UK-licensed platforms follow UKGC customer funds requirements, and the level of protection depends on the operator’s licence category. Polymarket International holds balances as USDC on Polygon, which is a different structure again: no regulator stands behind it, and the risk sits in the smart contract and the stablecoin rather than in a company balance sheet.

Tax Implications

Tax treatment of prediction market profits depends on jurisdiction, platform classification, and individual circumstances. This is general information, not tax advice. The IRS has not issued formal guidance specifically for prediction market trading, which means the actual tax treatment in the US is unsettled.

United States

Three possible treatments exist: Section 1256 contracts (60% long-term / 40% short-term capital gains), ordinary income (Schedule 1), or gambling income (Schedule C or W-2G rules). Kalshi’s CFTC DCM status makes it the strongest candidate for Section 1256 treatment, but tax professionals disagree on whether event contracts fit within that statute’s traditional scope. Many CPAs recommend ordinary-income reporting as the more conservative and audit-defensible approach until the IRS issues guidance.

Kalshi issues 1099-INT for interest on cash balances and 1099-MISC for referral bonuses. Kalshi’s position on 1099-B for event contracts has shifted and varies by source: some sources confirm 1099-B issuance for users with realized proceeds, others indicate Kalshi does not issue 1099-B for event contract trades. Robinhood explicitly states it does not provide 1099s for event contract trades, instead offering an “Event Contracts Annual Statement” that is “not a substitute tax reporting form.” Polymarket International issues no tax forms, leaving users to reconstruct P&L from blockchain records.

Whatever platform you use, self-reporting is required. The absence of a 1099 does not remove the tax obligation. Consult a tax professional familiar with event contracts before filing.

United Kingdom

Profits from UK-licensed betting exchanges (including Matchbook Predictions and Betfair Predicts) are tax-free for individual UK residents. This follows standard UK betting tax treatment. The operator pays gambling tax, but the user does not pay income or capital gains tax on the winnings.

EU member states

Tax treatment varies by country. Some EU states tax gambling winnings, others do not (Ireland, Belgium for recreational gambling). For financial instrument classification (where it applies), capital gains rules typically govern. Check local rules.

Other jurisdictions

Australia and New Zealand: gambling winnings typically tax-free for individuals (not a professional activity). Canada: similar tax-free treatment for recreational gambling. Brazil and Latin America: variable, check local rules. Asia: variable, generally taxable in jurisdictions with active enforcement frameworks.

Do Prediction Market Contracts Violate Sports Betting Laws?

This is specifically the contested question driving most of the US state-level lawsuits. The answer is legally unsettled and varies.

State AGs argue that a prediction market contract like “Will the Chiefs win Super Bowl LX?” is functionally identical to a sportsbook bet on the same outcome, and therefore subject to state gambling laws. Kalshi and the CFTC argue that federal commodities law preempts this state authority because the contracts are federally registered swaps under the Commodity Exchange Act.

For users, the practical implication: if you live in Massachusetts, Nevada, Arizona, Connecticut, Illinois, Maryland, Washington State, or Michigan, sports contracts on federal platforms may be restricted regardless of the legal theory. This restriction is implemented at the platform level through geofencing, not through user-level enforcement.

The underlying legal question will likely be resolved by the Supreme Court in 2027. Until then, the patchwork continues.

Legal Status Is Changing Fast

Prediction markets regulation has shifted roughly quarterly through 2025-2026. Key changes to watch in the next 12 months:

• Supreme Court decision on CFTC authority over sports contracts (likely 2027 term)
• UK Gambling Act reforms potentially bringing additional clarity
• EU-level coordination or lack of coordination as more member states take formal positions
• Australia and New Zealand potential enforcement expansion
• Additional states joining or withdrawing from CFTC-state enforcement actions
• Possible federal legislation from Senators Schiff and Curtis (Prediction Markets are Gambling Act)
• MiCA full implementation in July 2026, affecting crypto-based platforms in EU member states

What this means for users: a platform you can legally use today may be restricted tomorrow. A platform that is prohibited today may become legal (like Polymarket did in the US during 2025-2026). Check the current status before depositing large amounts.

Related Guides

• Prediction Markets Regulation (Full Global Overview)
• Prediction Markets Guide
• What Are Prediction Markets
• Prediction Markets vs Betting
• Best Prediction Markets Platforms
• Polymarket Review
• Kalshi Review

Bottom Line

Prediction markets are legal for you if you live in the US (federally), the UK (on licensed platforms), most of Latin America, and parts of Asia. They are prohibited or restricted in most of Europe, Australia, New Zealand, Singapore, Taiwan, Thailand, Argentina, and increasingly Canada. The exact answer depends on your specific country and sometimes your specific state or province.

If you live somewhere prediction markets are legal, use a licensed platform, verify your identity properly, and treat the product as the financial or betting instrument it technically is. If you live somewhere prediction markets are restricted, understand the real risks (account closure, frozen funds, tax complications, rare but possible regulatory action) before using VPN circumvention.

The picture is changing fast. A regulation guide published in 2025 is already partly outdated in 2026. Check current status before committing capital, and budget for the possibility that your access may change in the next 12-18 months.

FAQ

Are prediction markets legal in the US?

Yes, federally. CFTC-regulated platforms (Kalshi, Polymarket US, DraftKings Predictions, Robinhood Predictions, OG by Crypto.com) are legal nationwide. Some sports contracts are restricted in Massachusetts, Nevada, Arizona, Connecticut, Illinois, Maryland, Washington State, Michigan and other states with active state-level enforcement.

Are prediction markets legal in the UK?

Only on UKGC-licensed platforms. Matchbook Predictions (since January 2026) and Betfair Predicts (since April 2026) are legal. Polymarket and Kalshi are prohibited from serving UK users. Using a VPN to access them is against both platform terms and UK gambling law.

Is Polymarket legal in my country?

Polymarket operates in approximately 160 countries but is blocked in 33+ jurisdictions including the UK, France, Germany, Netherlands, Belgium, Portugal, Italy, Poland, Romania, Switzerland, Ukraine, Australia, New Zealand, Singapore, Taiwan, Thailand, Argentina, and US-sanctioned countries. The US has Polymarket US as a separate CFTC-regulated product in invite-only beta. Check Polymarket’s official geoblock list for your specific country.

Can I use a VPN to access prediction markets?

Physically possible but legally and practically risky. VPN use violates every major platform’s terms of service and does not make the underlying legal status of prediction markets in your country legal. Consequences range from account closure and frozen funds to (rarely) regulatory enforcement action. Detection has improved significantly in 2026.

Are prediction markets considered gambling?

Depends on jurisdiction. In the US, the CFTC classifies them as financial instruments (event contracts or swaps). In the UK, the Gambling Commission classifies them as betting intermediaries (gambling). In most of the EU, Australia, and New Zealand, they are classified as gambling. This classification determines which regulator has authority and what rules apply.

Do I have to pay tax on prediction market profits?

Depends on jurisdiction. In the US, the IRS has not issued prediction-market-specific guidance and tax treatment is unsettled (possible options include Section 1256, ordinary income, or gambling income treatment). In the UK, profits from licensed betting exchanges are tax-free for individual residents. EU member states vary. Tax obligations apply even if you access a platform through VPN in a restricted jurisdiction.

What is the age requirement for prediction markets?

18+ on all major regulated platforms in the US and UK. KYC verification is required before funding or withdrawing on CFTC-regulated platforms and UKGC-licensed operators. Polymarket International has formal age requirements but lighter verification in non-US jurisdictions.

Are my funds protected if a prediction market platform fails?

Partially. On CFTC-regulated platforms like Kalshi, deposits are held in segregated accounts under CFTC Designated Contract Market rules, separate from company operating funds. However, SIPC does not protect commodity accounts, and Kalshi is not an FDIC-insured bank. If a platform fails, fund recovery goes through bankruptcy or regulatory receivership rather than insurance. UK-licensed platforms follow UKGC customer funds requirements based on the operator’s licence category. Polymarket International holds funds as USDC on Polygon, which is structurally different again.

What happens if my state sues Kalshi?

Geofencing. Kalshi typically restricts sports contracts in states where active enforcement exists, but leaves other contract categories accessible. Your account and funds are not affected directly. You lose access to specific market types while the legal dispute is ongoing. If the state wins definitively, Kalshi may have to restrict all trading for residents of that state.

Are political prediction markets legal?

Yes in the US, with clear precedent from Kalshi’s 2024 court victory. The CFTC dropped its appeal in May 2025. No state has successfully restricted political contracts. Most other countries either prohibit political contracts specifically (Ukraine on military outcomes) or include them in general prohibitions on unlicensed prediction markets.

Can minors use prediction markets?

No. All major regulated platforms require 18+ age verification. Use by minors violates platform terms and, in most jurisdictions, violates gambling or financial regulations as well.

Should I worry about criminal prosecution for using prediction markets?

Extremely unlikely in most jurisdictions. Enforcement has overwhelmingly targeted operators rather than individual users. Exceptions exist in jurisdictions with aggressive anti-gambling criminal statutes (Singapore, China, some Middle Eastern countries). The main practical risks are account closure, frozen funds, and (rarely) regulatory warnings.

Will prediction markets become legal in my country?

Hard to say. US trend is clearly toward expansion. UK has a working gambling framework. EU trend is toward bans. Australia and New Zealand are unlikely to reverse. Asia varies. The next 18-24 months will bring a likely Supreme Court decision in the US, potential EU coordination, and probable additional bans in restrictive jurisdictions. Monitor your country’s regulatory announcements if access matters to you.