Prediction markets vs sports betting, what is the difference?

Prediction markets vs sports betting is mostly a question of how the deal is built and who regulates it. A sports bet on a licensed sportsbook falls under state gambling law. A sports contract on an exchange like Kalshi is treated by its operator and by the Commodity Futures Trading Commission (CFTC) as a federally regulated derivative.

What is the difference between CFTC event contracts and sportsbooks?

State-licensed sportsbooks exist because of a 2018 Supreme Court decision. In Murphy v. NCAA, decided on May 14, 2018, the Court struck down the federal law that had stopped most states from authorizing sports betting. Each state now decides whether to allow it and sets its own licensing rules.

Event contracts come from a different body of law. A law firm guide from WilmerHale explains that they are regulated by how they are structured, traded and cleared, not by what they predict. A retail-facing market generally has to register as a designated contract market (DCM), which must meet 23 core principles, and trades are cleared through a registered clearinghouse.

Kalshi says it is both a DCM and a clearinghouse under the CFTC. It calls itself an exchange, not a sportsbook, where customers trade with each other, and says it does not win when its customers lose and takes no built-in house cut. More detail is in what is Kalshi.

Are prediction markets gambling?

That is the core legal dispute. Kalshi says its federal status lets it offer sports contracts even in states where sports betting is banned. Its users must be at least 18.

States see it differently. CBS Sports' November 4, 2026 tracker lists lawsuits or enforcement in states including Nevada, Massachusetts, Maryland, Ohio, Michigan, Washington and Wisconsin. Ohio's $5 million fine against Kalshi was upheld by a lower court, a Minnesota law banning prediction markets was blocked by a federal judge, and Utah has filed civil enforcement actions in state court. The recent timeline is in what are prediction markets.

The CFTC is backing the exchanges. On October 27, 2026 it sued Utah, saying Congress gave the agency sole responsibility for these markets. The release said it had brought proceedings against nine other states. The agency's wider role is explained in what does the CFTC do in crypto.

Are prediction markets legal in every state?

Not in practice. CBS Sports says the platforms argue they are technically legal in all 50 states, but its table shows Kalshi sports markets blocked or not live in Michigan, Nevada, Washington and Utah, after court orders or rulings. Courts have split. A federal judge permanently barred Arizona from bringing criminal charges against Kalshi, while another ruled that Utah may apply its anti-gambling laws.

Polymarket's state-by-state position is covered in is Polymarket legal in the US.

Which product you can use, and which regulator oversees it, depends on where you live. On either kind of platform you can lose the full amount you put in.

Rules differ by country and state and change often. Check the regulator or a qualified professional for your own situation.