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.

Quick Legality Answers by Country

The country-level answer for the most common user questions in April 2026:

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
United Kingdom: Legal only on UKGC-licensed platforms. Polymarket and Kalshi are prohibited from serving UK users
Canada: Mostly restricted. Kalshi blocks all Canadian users. Polymarket operations limited in Ontario. Grey area in other provinces
Australia: Blocked. ACMA has directed ISPs to block Polymarket. Using it through VPN violates the Interactive Gambling Act 2001
New Zealand: Prohibited. Department of Internal Affairs ruled in February 2026 that prediction markets are illegal under the Gambling Act 2003
EU member states: Mostly restricted. France, Germany, Netherlands, Belgium, Portugal, Italy, Poland, Romania, Cyprus, Greece all block major platforms
Japan, South Korea, India: Grey area. Platforms operate without formal authorization but without active enforcement
Brazil, Chile, Mexico: Mostly open. Polymarket operates without active restriction
Argentina: Banned since March 2026 after Buenos Aires court ruling
Singapore, Taiwan, Thailand: Blocked or geoblocked
China: Blocked, access requires VPN

This is the 2026 snapshot. The picture has been changing roughly quarterly as regulators take formal positions, which means anyone using prediction markets seriously should check their jurisdiction’s status periodically.

United States: Federally Legal, State Picture Messy

For US users, prediction markets are legal under federal law. Kalshi operates under a CFTC Designated Contract Market license granted in 2020. Polymarket US launched in February 2026 via the CFTC-registered QCX exchange. DraftKings Predictions, Robinhood Predictions, OG by Crypto.com, and a few smaller platforms all operate as CFTC-regulated venues.

What this means for you practically: if you are a US resident and you sign up for Kalshi or Robinhood Predictions, you are using a federally regulated financial product. Your deposits are held in segregated accounts under CFTC Designated Contract Market rules. You have access to CFTC dispute resolution if something goes wrong. You are not breaking federal law.

One important clarification about fund protection: 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 different from FDIC or SIPC insurance. SIPC explicitly does not protect cash held in connection with commodities trades, and Kalshi is not an FDIC-insured bank. If Kalshi faces operational failure, fund recovery would go through bankruptcy or regulatory receivership rather than insurance. For most users this distinction does not matter because CFTC-registered DCMs have strong operational requirements, but it is worth understanding before depositing large amounts.

State-level restrictions on sports contracts

The complication comes at the state level, and specifically for sports event contracts. Several states argue that sports contracts constitute gambling under state law regardless of CFTC registration. As of April 2026:

Massachusetts: Kalshi sports contracts blocked under a preliminary injunction issued January 2026
Nevada: A Nevada judge upheld the state’s ban on April 6, 2026, ordering Kalshi to implement geofencing by May 4
Arizona: Criminal charges filed against Kalshi. A federal judge allowed the state to press those charges in April 2026
Connecticut and Illinois: Active cease-and-desist orders against prediction market platforms. Both sued by the CFTC on April 2, 2026
New Jersey: Federal courts sided with Kalshi. Third Circuit affirmed on April 6, 2026
Maryland: District court ruled against Kalshi, denying preliminary injunction
Washington State: Robinhood filed preemptive lawsuit in April 2026. AG Nick Brown publicly argued the case against prediction markets
Michigan: Platform availability restricted on some prediction markets

The practical impact for users: sports contracts may be unavailable in these states. Non-sports contracts (politics, economics, crypto, culture) are generally still accessible. Each platform geofences differently, so the specific markets available to you depend on your state of residence at the platform level.

Political and other non-sports contracts

Political event contracts are clearly legal at the federal level after Kalshi’s 2024 court victory against the CFTC. The CFTC dropped its appeal in May 2025. No state has successfully restricted political contracts. Economic, crypto, and cultural markets operate without significant state-level challenges. Senators Adam Schiff and John Curtis introduced the “Prediction Markets are Gambling Act” in March 2026, which would ban federal officials from trading and restrict certain event contract categories, but the bill has not passed.

Can the Supreme Court change this?

Likely yes. The Third Circuit ruled in Kalshi’s favor in April 2026. The Ninth Circuit heard oral arguments April 16 on Nevada, Kalshi, Robinhood, and Crypto.com cases and is expected to rule differently. A circuit split would almost certainly lead to a Supreme Court case by the 2027 term. The outcome would define whether state gambling laws can be enforced against CFTC-registered contracts nationwide. Until then, the patchwork continues.

United Kingdom: Clear and Restrictive

The UK has the clearest regulatory picture of any major market. The UK Gambling Commission confirmed in February 2026 that prediction markets fall within the Gambling Commission’s remit as betting intermediaries, similar to how Betfair Exchange operates. The Financial Conduct Authority does not regulate these products.

Practical implications for UK users:

Kalshi: Prohibited from serving UK users. Using a VPN to access Kalshi from the UK is a violation of both the platform’s terms and UK gambling law
Polymarket International: Prohibited. UK is on Polymarket’s geoblock list. Using a VPN to access it is against platform terms
Matchbook Predictions: Legal. Launched January 2026 under Matchbook’s existing UKGC exchange license. Works on sports-focused markets
Betfair Predicts: Legal. Launched April 2026 as an invite-only beta, operating under Betfair’s existing UKGC license

UK users looking for legal prediction market access should use Matchbook Predictions or Betfair Predicts. Profits from these platforms are tax-free for UK residents (consistent with standard UK betting tax treatment). Operators themselves pay gambling tax, not users.

Canada: Restricted, Province-Dependent

Canada regulates gambling at the provincial level, which creates a similar patchwork to the US.

Kalshi: Restricts all Canadian users as a general policy. Not accessible from any Canadian province
Polymarket: Operations limited in Ontario following regulatory actions. Grey area in other provinces (Quebec, British Columbia, Alberta) where the platform is technically unlicensed but enforcement is limited
No Canadian-licensed prediction market operates at national scale as of April 2026

The practical answer for Canadian users: if you are in Ontario, international prediction markets are largely not available legally. If you are elsewhere in Canada, platforms technically geoblock you but some users access them through VPNs at their own risk.

European Union: Mostly Restricted

The EU is the most restrictive major region. Most member states have taken explicit action against Polymarket and similar platforms under national gambling laws.

Countries where Polymarket and Kalshi are formally blocked

France: ANJ declared prediction markets “not authorised in France and considered illegal gambling services”
Germany: GGL warns against Polymarket as illegal under the Interstate Treaty on Gambling
Netherlands: Kansspelautoriteit issued a penalty order against Polymarket
Belgium: Gaming Commission blacklisted Polymarket
Portugal: Banned after insider trading concerns during January 2026 presidential election, when over €4 million was placed in hours before the result
Italy, Poland, Romania, Cyprus, Greece, Switzerland, Ukraine: All have explicit restrictions or bans

Countries where access is still possible

Spain and a few smaller EU states do not currently geoblock or take formal enforcement action. This is a grey area rather than a green light. The same content that gets blocked in Germany is accessible in Spain, but a user relying on that access has no legal certainty if Spanish authorities take a different position later.

The Gibraltar option

Gibraltar became the first European jurisdiction to license a prediction market operator (PredictStreet) in March 2026, with the platform launching April 9 focused initially on FIFA World Cup 2026 markets. This gives European users a licensed alternative to Polymarket. Malta has reportedly considered a similar framework but has not moved yet.

Australia and New Zealand: Both Blocked

Both Australia and New Zealand have taken clear positions classifying prediction markets as illegal gambling.

Australia: The Australian Communications and Media Authority determined in August 2025 that Polymarket breaches the Interactive Gambling Act 2001. ISPs are required to block access to Polymarket’s domains. Using a VPN to bypass this is explicitly a violation of Australian law. The trigger for enforcement was Polymarket’s use of TikTok and Instagram influencer promotions targeting Australian users during the 2025 federal election, which ACMA treated as evidence of intentional targeting of Australian consumers.

New Zealand: The Department of Internal Affairs ruled in February 2026 that prediction markets like Polymarket and Kalshi are prohibited under the Gambling Act 2003 and Racing Industry Act 2020. Unlike Australia, New Zealand does not currently require ISP-level blocking, so the platforms technically remain accessible unless they independently geoblock NZ users. The legal status is unchanged: using them is illegal even if access is technically possible.

Asia and Latin America: Mostly Grey Areas

Asia

Japan, South Korea, India: No explicit ban. Platforms operate without formal authorization or active enforcement. Grey area rather than legal approval
Singapore, Taiwan, Thailand: Blocked under strict anti-gambling regulations
China: Blocked. Access requires VPN circumvention. Polymarket has reportedly begun targeting Chinese users despite the legal barrier
Hong Kong: Grey area, limited enforcement

Latin America

Brazil, Chile, Mexico: Mostly open. Polymarket operates without active restriction. Brazil is one of Polymarket’s most active markets by volume
Argentina: Banned as of March 2026 following a Buenos Aires judge’s ruling declaring Polymarket an unlicensed betting platform
Colombia, Peru: Grey area, no formal enforcement

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:

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
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
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

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

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.