Are prediction markets gambling? It depends on who you ask — and in the US, federal regulators and some states give different answers. What isn't in doubt: every position can lose its full value.
How prediction markets differ from betting
| Prediction market (e.g. Polymarket, Kalshi) | Sportsbook | |
|---|---|---|
| Counterparty | Other traders | The bookmaker |
| Price | Set by supply and demand | Set by the book, with a margin |
| Exit before the event | Sell at the market price | Only if cash-out is offered |
| Platform's income | Trading fees | The vig and losing bets |
| US regulator | CFTC (federal) | State gaming commissions |
Because the platform doesn't take the other side, it has no stake in whether you win. You still pay costs: fees, spread and slippage.
Are prediction markets gambling under US law?
The federal view: derivatives
Event contracts listed on a CFTC-regulated designated contract market are treated as derivatives under the Commodity Exchange Act. That's how Kalshi and Polymarket US operate.
The state view: sports betting
Several states disagree for sports contracts, arguing they're unlicensed sports betting. In Nevada, a state court issued a preliminary injunction on May 29, 2026 barring Polymarket's sports, election and entertainment contracts there while the case continues. In late July 2026, attorneys general from 44 states told the CFTC it has no authority over sports event contracts, while the CFTC has fought state actions in court. The details are in Polymarket legal states.
In January 2022 the CFTC itself took the view that Polymarket's unregistered event markets broke the rules: it fined Polymarket's operator $1.4 million. The difference today is registration, not the product's basic design.
Sports prediction markets
Sports markets are now a large share of volume and the centre of the legal fight. A contract paying $1 if a team wins is economically close to a moneyline bet — the differences are the exchange structure, the fees and the ability to sell early. More in Polymarket sports markets.
Political betting markets
Election markets made prediction markets famous. As forecasts they react fast to news, but they can be moved by large traders and they're not facts. Many countries ban political betting outright, which is one reason Polymarket restricts access in some places — see available countries.
"Share market betting" vs prediction markets
"Share market betting" usually means betting on stock prices. Prediction markets trade on events instead, and every share ends at exactly $1 or $0. That fixed payoff makes the maximum loss clear — it's the price you paid.
Is Polymarket halal?
Many Islamic scholars consider contracts based on excessive uncertainty (gharar) and pure chance or speculation (maysir) impermissible, which would cover most prediction market trading. Some argue that markets aggregating information differ from games of chance. This is a religious question: ask a qualified scholar rather than relying on a website.
Our view
Call it trading or betting — the risk is the same. Only use money you can afford to lose, set limits, and read our responsible trading page.
Related guides
Next step
In the United States, the regulated route is the Polymarket US app. Read our guides on signing up and depositing to get started, start small and only use money you can afford to lose.