What are prediction markets like Polymarket and Kalshi?

Prediction markets are platforms where people buy and sell contracts tied to the outcome of future events, such as elections, economic data or sports results. Each contract settles at a fixed amount if the event happens and at zero if it does not. Polymarket and Kalshi are the two best-known examples, and they are regulated very differently.

How do prediction markets work?

On Polymarket, shares trade between $0.00 and $1.00, according to its documentation. A winning share pays $1 and a losing share pays nothing. A "yes" share priced at 65 cents implies the market sees about a 65% chance of that outcome.

Traders deal with each other through an order book rather than betting against the platform, and they can sell before the result is known. Polymarket runs on the Polygon blockchain, uses a dollar token backed by the stablecoin USDC as collateral, and often relies on the UMA oracle to settle outcomes. You can read more about outside data feeds in what is an oracle.

What is the difference between Polymarket and Kalshi?

Kalshi is a traditional regulated exchange. The CFTC designated KalshiEX as a contract market in November 2020, which places it under federal derivatives rules.

Polymarket started as a crypto platform. In 2022 it settled with the CFTC, paid a $1.4 million fine and agreed to block US users, according to The Block. In July 2025 it agreed to buy QCEX, a CFTC-regulated exchange, for $112 million. By April 2026 that business was running as Polymarket US, a more limited version, while the global platform still barred US customers.

Are prediction markets legal in the US?

The answer depends on the contract and on the state. Event contracts listed on a CFTC-registered exchange fall under federal oversight, and you can learn more in what does the CFTC do in crypto.

Election contracts were the first big fight. In October 2024, a federal appeals court refused to pause a ruling that let Kalshi list contracts on US congressional control, The Block reported.

Sports contracts are the current fight. In April 2026, the Third Circuit ruled 2-1 that New Jersey could not enforce its gambling laws against Kalshi, the first federal appeals ruling on the issue. That came days after a setback for Kalshi in Nevada, CDC Gaming Reports said.

How is the CFTC approaching event contracts now?

In March 2026, the CFTC published an advance notice of proposed rulemaking asking the public how its rules should apply to prediction markets and which event contracts might be against the public interest. This is an early step, not a final rule. As of October 2026, both court cases and CFTC rulemaking are still moving. For the broader picture, see who regulates crypto in the US.

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