Nearly half of U.S. states have laws prohibiting election betting, creating a complex patchwork of regulations as prediction markets like Kalshi and Polymarket grow in popularity. While 23 states explicitly ban wagering on election outcomes, the legality of these platforms remains a subject of ongoing litigation between state authorities and federal regulators, according to data from the National Conference of State Legislatures (NCSL).
The Legal Landscape of Election Betting
Election betting remains illegal in some or all circumstances in 32 states, according to the NCSL. These prohibitions vary significantly in scope and historical origin. In states like Arkansas, statutes explicitly forbid betting on election results, while other jurisdictions rely on broader gambling laws that do not specifically name election outcomes.
Some states, such as Oregon, limit restrictions to specific scenarios, such as preventing candidates from wagering on their own races. Others, including Iowa, Massachusetts, Pennsylvania, and Rhode Island, focus enforcement on the organizers of betting pools rather than the individual participants. The penalties also differ; while most states classify election betting as a misdemeanor, jurisdictions like Nebraska and Illinois may treat it as a felony depending on the scale of the wager or the offender’s criminal history.
Federal Regulators vs. State Authorities
A central point of tension exists between state-level bans and the U.S. Commodity Futures Trading Commission (CFTC). Federal regulators have argued that platforms like Kalshi and Polymarket facilitate the trade of financial contracts rather than traditional gambling. Because these platforms are structured as event-contract markets, federal authorities have contended they should remain exempt from state-level gambling prohibitions.
The CFTC has engaged in legal challenges against states attempting to enforce local bans, asserting federal oversight of these financial products. This conflict has prompted legislative action across the country, with lawmakers in at least 16 states introducing bills in 2026 to either regulate, restrict, or outright ban the operation of prediction markets within their borders.
Recent Legislative Trends
The legislative push to address prediction markets has intensified throughout 2026. Minnesota became the first state to enact a statewide prohibition on platforms like Kalshi and Polymarket, though the law includes narrow exceptions for hedging risks related to weather or insurance-style contracts. The federal government has since initiated legal action to challenge the validity of Minnesota’s ban.
Other states have taken different approaches:
- Kentucky: Legislators enacted laws in 2026 that not only banned election betting but also imposed taxes on prediction market operators and prohibited associations from contracting with them.
- Tennessee: State lawmakers passed legislation making it a felony to influence the outcome of an event while holding a related prediction market trade.
- Maryland and New York: Governors in these states have issued executive orders aimed at preventing state employees from engaging in potential insider trading on prediction platforms.
FAQ: Understanding Prediction Markets and the Law
Are prediction markets the same as sports betting?
No. According to the CFTC, prediction markets are classified as financial event-contract markets. Unlike traditional bookmakers, which set odds and act as the "house," these platforms allow users to trade contracts based on the probability of real-world outcomes.
Can I be prosecuted for using these platforms?
It depends on your jurisdiction. In states with strict bans, such as Arkansas or Kentucky, engaging in election-related wagers can lead to criminal charges. Because laws vary by state, legal experts emphasize that users are subject to the statutes of the state where they reside.
Why are states moving to regulate these platforms now?
The surge in trading volume on platforms like Polymarket and Kalshi has prompted state legislatures to re-examine 19th-century-era statutes and apply them to modern digital platforms. Concerns generally center on election integrity, the potential for market manipulation, and the classification of these trades as unregulated gambling.
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