Overview: why prediction markets matter now
In 2025, three headlines changed the conversation in the US: Polymarket announced a $112M purchase of a CFTC-licensed exchange/clearinghouse (QCEX), positioning for a regulated US on-ramp; the CFTC affirmed Kalshi’s status by modifying its DCM order and courts weighed in on state-level challenges; and PredictIt won a federal case vacating the CFTC’s attempted shutdown, clearing the way to keep operating. Together, these moves point to a regulated pathway for event-based trading in the US—albeit with limits.
How prediction markets work (in one minute)
Prediction markets trade “Yes/No” contracts priced between $0 and $1; the price maps directly to the market’s implied probability (e.g., $0.63 ≈ 63%). At settlement, a correct “Yes” pays $1 and “No” pays $0. Traders can buy/sell before resolution or hold to expiry. That structure makes them useful for aggregating expectations across elections, policy, sports, pop culture, and more.
2025 legal landscape: federal vs state, and where lines are moving
At the federal level, the CFTC regulates event contracts when listed on registered exchanges (designated contract markets, or DCMs). Kalshi has been a CFTC-designated DCM since 2020; in January 2025 the Commission granted a petition to modify Kalshi’s order (including intermediated futures trading). Event contracts must also pass public-interest tests, and certain “gaming” or sensitive contracts can be blocked.
At the state level, friction remains. Some courts have enjoined state agencies from interfering with federally regulated DCM activity (e.g., New Jersey/Nevada cases favoring Kalshi), while a Maryland decision recently went the other way—illustrating a live split that may take time to harmonize.
Meanwhile, PredictIt prevailed in July 2025: a Texas federal court vacated the CFTC’s 2022 withdrawal of no-action relief as “arbitrary and capricious,” permanently enjoining the shutdown.
Bottom line: federal doors are opening for regulated event trading, but politics-related and sports-related contracts still face scrutiny, and states continue to test the boundaries. Robinhood’s decision to pull Super Bowl contracts after CFTC pushback shows the caution around sports.
Polymarket’s 2025 pivot: toward a compliant US route
Polymarket settled with the CFTC in 2022 (a $1.4M penalty and market wind-down for unregistered activity affecting US users). In July 2025 it agreed to acquire QCEX (a CFTC-licensed exchange and clearinghouse) for $112M, a move widely interpreted as a path to re-enter the US within a regulated framework. Reuters also reported a new funding round valuing the company above $1B. Platform volume has been surging, with ~$1.16B traded in June 2025.
What to watch next: how the QCEX integration is implemented (products, KYC, limits) and how regulators approach categories like politics and sports under CFTC rules. Advocacy groups have already weighed in with letters to the CFTC about the deal.
Fees and UX: Polymarket vs Kalshi vs PredictIt vs sportsbooks
Polymarket
Docs currently state no trading fees (USDC deposits/withdrawals may incur third-party costs), with markets operating under posted rules and a bonded proposal/dispute process that can escalate into UMA’s oracle for final resolution. Gas/network or on-ramp fees may still apply.
Kalshi (CFTC-regulated DCM)
Kalshi uses maker/taker style fees and updates schedules periodically. Public docs outline deposit/withdrawal fees and maker-fee formulas; the exchange also files fee programs with the CFTC.
PredictIt
Charges a 10% fee on profits and a 5% withdrawal fee (plus timing rules).
Traditional US sportsbooks (for context)
Sportsbooks build margin via “vig/juice.” A common –110/–110 line implies a combined probability of ~104.76%, i.e., an effective overround of ~4.76%—a structural house edge. Peer-reviewed and educational resources cover this math.
Takeaway: prediction markets can be fee-lean relative to fixed-odds sportsbooks, but actual cost depends on platform fees, spreads, and any on-chain transaction costs.
What can (and can’t) list in the US?
- On regulated DCMs: Event contracts must meet the Commodity Exchange Act and CFTC rules; some categories (e.g., certain gaming/“public interest” concerns) can be barred or require higher scrutiny. Legal commentary in 2025 notes the CFTC’s evolving stance as event contracts expand into sports and entertainment.
- Offshore/DeFi: US users face restrictions unless activity is routed through a compliant US venue; recent history shows US regulators will act against unregistered event markets.
Are prediction markets “the future” of US betting?
The bull case
- Accuracy & engagement: Markets turn information into odds quickly; many studies and explainers highlight their signal value versus polls or punditry.
- Regulatory beachhead: Kalshi’s DCM status, PredictIt’s court win, and Polymarket’s QCEX plan create multiple regulated routes.
- Product breadth: Beyond politics, markets span macro, entertainment, and sports-style propositions—potentially complementing traditional betting.
The bear case
- Policy risk: CFTC public-interest determinations, plus state-level objections, can curtail categories (e.g., sports). Robinhood’s retreat underscores the risk.
- Limits & KYC: Regulated venues may enforce position caps, higher KYC, and narrower menus than offshore sites.
- Fragmentation: Conflicting state rulings and uneven acceptance by payment partners slow mainstream adoption.
Our view for 2025–2026
Prediction markets are poised to complement, not replace, US sportsbooks. Expect growth in finance-adjacent and entertainment markets on regulated venues, with politics and sports expanding cautiously as legal guardrails settle.
How to evaluate a platform (quick checklist)
- Regulatory status: Is the venue a CFTC-regulated exchange (DCM) or operating under specific relief? Verify on cftc.gov.
- Fees & limits: Read fee schedules and any position caps.
- Market rules: Always read resolution criteria and sources; disputes follow posted procedures (e.g., Polymarket proposal/challenge/UMA).
- Category coverage: Politics and sports may face extra hurdles; watch listings and regulator notices.
- Liquidity & slippage: Volume is rising on leading venues (e.g., Polymarket’s June 2025 totals), but liquidity varies by market.
FAQs
Is Polymarket legal for US users right now?
Polymarket settled with the CFTC in 2022 and geofenced the US. Its July 2025 acquisition agreement for QCEX (a CFTC-licensed exchange/clearinghouse) is widely viewed as a path to a compliant US launch, but availability depends on how that integration is implemented and approved.
What’s the status of political markets in the US?
PredictIt won a July 2025 ruling vacating the CFTC’s withdrawal of no-action relief, allowing it to continue operating; Kalshi is a CFTC-regulated DCM. Category-specific approvals and public-interest reviews still apply.
Can prediction markets list sports bets?
Some proposals face pushback; Robinhood removed Super Bowl contracts after CFTC concerns. Courts are split on whether states can block DCM-listed event contracts.
Are fees lower than at sportsbooks?
Often, yes. Sportsbooks embed vig (–110/–110 ≈ 4.76% overround). Prediction-market fees depend on the venue: Polymarket’s docs say no trading fees (network/on-ramp fees can apply); Kalshi uses exchange-style fees; PredictIt takes 10% of profits plus a 5% withdrawal fee.
How do I avoid resolution surprises?
Read the market’s rules and sources. On Polymarket, outcomes are proposed with a bond, open to disputes, and may escalate to an oracle (UMA) for finality.
