Trading Prediction Markets From the United States: The Regulatory Landscape

The regulatory picture for prediction market trading from within the United States is genuinely bifurcated, and understanding that split is the starting point for any US-based trader. On one side sit exchanges like Kalshi, which are designated contract markets regulated directly by the Commodity Futures Trading Commission, meaning they are licensed to offer event contracts to US customers in a manner broadly analogous to other regulated futures products. On the other side sit crypto-native, globally accessible platforms like Polymarket, which have historically restricted US persons from trading through their terms of service and geoblocking, reflecting the fact that they have not sought or received the same kind of US regulatory authorization.

This distinction exists because the CFTC's jurisdiction over event contracts, and the process by which a platform becomes a legally recognized exchange in the United States, is a deliberate regulatory pathway involving compliance obligations around custody of funds, market surveillance, and reporting. A platform that has gone through this process, like Kalshi, can market directly to US customers and hold itself out as a regulated venue. A platform that has not, regardless of its size or global popularity, is generally not permitted to knowingly offer its products to US persons without running afoul of US derivatives law, which is precisely why offshore platforms restrict US access rather than simply operating without restriction everywhere.

PredictIt represents a third, distinct model worth understanding on its own terms. It has historically operated in the United States under a specific regulatory arrangement tied to its academic, research-oriented origins, with restrictions on the size of positions any individual trader could hold, reflecting its framing as a small-stakes market intended to generate research data rather than a full-scale commercial exchange. That arrangement has been the subject of regulatory review and revision over time, illustrating that even within the US, the rules governing a specific platform are not necessarily fixed indefinitely.

Attempting to circumvent geoblocking on an offshore platform, for instance through a VPN, generally violates that platform's own terms of service even where it might not itself be a distinct crime, and it forfeits any of the protections and dispute-resolution processes a platform's terms would otherwise offer, since a user has already breached the agreement under which those protections were extended. It can also expose funds to greater practical risk, since a platform operating outside the reach of US regulators offers a US person circumventing its access controls very little recourse if something goes wrong with an account or a payout.

For a US-based trader, the straightforward and lowest-friction path is to use platforms that are explicitly built and licensed to serve the US market, such as Kalshi, or a small-stakes platform like PredictIt operating within its specific regulatory arrangement. This sidesteps both the legal ambiguity of accessing a geoblocked offshore platform and the practical fund-safety concerns that come with using a venue that has not agreed to serve, and does not have obligations toward, US customers.

This overview is general in nature, reflects a regulatory landscape that continues to evolve, and should not be treated as legal advice for any individual's specific situation. Given how much this space has shifted even in recent years, and how much further movement seems likely as regulators continue to work out how event contracts fit within existing frameworks, anyone with meaningful capital at stake should consult a qualified attorney familiar with commodities and derivatives law before making decisions based on assumptions that may already be outdated.