Prediction markets and US law

What prediction markets are

A prediction market is a platform where you trade contracts tied to a yes-or-no question, such as "Will this team win?" or "Will this bill pass?". A contract pays a fixed amount if the answer turns out to be yes and nothing if it's no. The price moves as people buy and sell, so it works like a running estimate of the odds.

Here's a simple example in dollars. Say a contract pays $1 if a team wins and it's trading at 60 cents. If you buy 100 contracts for $60 and the team wins, you receive $100. If the team loses, you receive nothing and lose your $60. Fees, if any, come on top. That's the same shape as a sports bet risking $60 to win $40, which is exactly why states are paying attention.

The large platforms list these contracts on exchanges regulated by the Commodity Futures Trading Commission (CFTC). That's the heart of the legal dispute, and it's why bills in Congress talk about what "CFTC-regulated exchanges" may list. For the wider picture, start at our US gambling laws hub.

Prediction markets under federal law

Federal gambling law leaves room for argument here. UIGEA, the 2006 law that targets payments for unlawful internet gambling, defines "bet or wager" in 31 U.S.C. § 5362 (opens in a new tab) and expressly excludes securities and commodities transactions. Platforms point to that exclusion and to their federal exchange status. Our UIGEA guide explains the rest of the statute.

The Wire Act is the other federal law in play. It bars people in the betting business from using wire communications for interstate sports bets, and the First Circuit held in 2021 that its prohibitions apply only to sports-related wagering. Whether an event contract is a "bet or wager" under the Wire Act isn't settled by any ruling recorded here. See our Wire Act page.

How states treat prediction markets

States regulate sports betting, and several have concluded that sports event contracts are sports bets offered without a state license. Here's what's on record.

Nevada's position matters because its licensees include the biggest casino companies. Notice 2025-77 (opens in a new tab) tells them that sports event contracts are wagers. Connecticut's cease and desist release (opens in a new tab) is blunt: only licensed entities may offer sports wagering in the state. Missouri's attorney general made the same point in its order to unlicensed prediction markets (opens in a new tab), and Kentucky's HB 904 (opens in a new tab) writes event contracts into state law.

Our page on cease and desist letters puts these actions next to the letters states send offshore casinos. For individual states, see Nevada, New York, Connecticut, Maryland, Missouri and Kentucky.

Prediction market bills in Congress, 2025–2026

Congress is crowded with proposals. The Congressional Research Service's report Prediction Markets Legislation in the 119th Congress (opens in a new tab), dated August 17, 2026, lists them. Most had no action beyond introduction or committee, and none had been enacted.

No federal bill dedicated to legalizing or banning online casinos appears in the report. Several of these bills would, however, define "casino-style game" to keep casino-like contracts off federal exchanges, which shows how close lawmakers think the two products are.

Prediction markets vs sportsbooks vs online casinos

These three products get mixed up, but they sit under different rules. The table below compares them on the points that matter to players.

For the licensed sports side, see sports betting laws and is sports betting legal in my state. For ages, see gambling age by state.

What the prediction markets fight means for players

If you use a prediction market, the practical risk is that your access can change with a state action. When a state regulator orders a platform to stop offering sports contracts to residents, the platform may restrict accounts in that state. None of the actions recorded here charges an individual user, and the state orders are aimed at the platforms.

Money works differently too. Your maximum loss on a contract is the price you paid, plus any fees the platform charges. There's no fixed house edge in the casino sense, but that doesn't make losses less likely, and money you put in can be lost in full. Gambling winnings are taxable federal income; how event-contract gains are taxed is a question to take to a tax professional. Our gambling taxes page covers the rules for wagering.

How to check where prediction markets stand in your state

1. Look up your state's gaming regulator on our state regulators page.
2. Search the regulator's and attorney general's news pages for "event contracts" or "prediction markets".
3. Check whether your state licenses sports betting, and through which operators.
4. Read the platform's own terms for any states it restricts.
5. Watch for state lawsuits, like Kentucky's, which can lead to court orders.
6. If you're unsure, stick to state-licensed options or don't play.

Our state regulators list tells you who to look up, and each state hub, such as Michigan, explains the local law.

Prediction markets and problem gambling

Fast-settling sports contracts can be as habit-forming as bets, and Congress has noticed: H.R. 8970 would fund research on gambling disorders including prediction markets, and S. 4060 would require a self-exclusion list. Set a budget, avoid trading to win back losses, and use blocking tools if you need a break. Our guide to chasing losses explains why that pattern is risky.

Prediction markets timeline

Decode and Silver Oak: online casinos, not prediction markets

None of our partners runs a prediction market or a sportsbook, so no partner fits this topic directly. We show Decode and Silver Oak because they're the partners assigned to this page, and they're online casinos offering slots and table games. Both are offshore and not licensed or regulated by any US state, so there's no state regulator to complain to, no state-backed protection of your balance and terms the casino sets. Check your state's law before you sign up.

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Both bonuses are slot-focused; table games are often excluded or weighted lower. The house edge applies while you wager, so expect losses over time. We earn a commission through our links, and our order is commercial. Read the Decode review and Silver Oak review first.

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