Are Prediction Markets Gambling? Kalshi, Polymarket and the Fight Over Sports Bets

Legally, it depends who you ask, and US courts are split. Kalshi and Polymarket are regulated by the federal Commodity Futures Trading Commission (CFTC) as exchanges, not licensed as sportsbooks. But most of what people trade on them is sports, dozens of states say that's illegal sports betting, and in 2026 two federal appeals courts agreed with the states while another sided with Kalshi. In practice, if you're putting money on who wins a game, it works on your brain like a bet.

How prediction markets work

You buy a "contract" on a yes-or-no question, like "Will the Oilers win tonight?" If you're right, it pays out. If you're wrong, you lose what you paid. The platforms call it trading. To me, it's a bet with a different name on it.

And it's mostly sports. During the World Cup in June 2026, Kalshi traded about $31 billion, and about 85% of its trading was sports.

Where the legal fight stands (October 2026)

• For Kalshi: in April 2026, the Third Circuit ruled 2-1 that federal law blocks New Jersey from enforcing its gambling laws against Kalshi. New Jersey has asked the Supreme Court to take the case, backed by dozens of states.
• Against Kalshi: in August 2026, the Ninth Circuit ruled Nevada can regulate its sports contracts. In September, the Sixth Circuit ruled the contracts aren't swaps and state gambling law applies in Ohio and Tennessee. A Ninth Circuit panel also blocked Kalshi on California tribal lands.
• Massachusetts won a court order blocking Kalshi's sports contracts in January 2026.
• The federal government is fighting the states. In late October 2026, the CFTC sued Utah after Utah went after Kalshi.

With appeals courts split, this is likely headed to the Supreme Court.

The age gap

Most US states set sports betting at 21. Kalshi lets you trade at 18. A CNN analysis reported by Fortune found users aged 18 to 21 traded about $3.9 billion on sports contracts on Kalshi in 2026. Kalshi says that's a small share of its volume.

State self-exclusion doesn't cover them

This is the part that worries me most. State self-exclusion lists bind state-licensed operators, and prediction markets aren't state-licensed. In October 2026, NPR reported on a Pennsylvania man who had gone bankrupt from gambling and joined the state's self-exclusion program, then lost more than $25,000 on Kalshi. Kalshi called it "a cherry-picked case."

If you've self-excluded from sportsbooks, you need to exclude from prediction markets separately:

• Kalshi: how to self-exclude from Kalshi.
• Polymarket: how to self-exclude from Polymarket. It added a lifetime option in October 2026.
• All participating platforms at once: SelfExclude.io covers Kalshi and Novig, with Polymarket, Robinhood and others listed as coming soon. US only, up to 12 months.

What about Canada?

Kalshi's member agreement bars trading from Canada. Polymarket has blocked Ontario since 2023, and in 2025 it settled with the Ontario Securities Commission. Canadian securities rules have banned short-term binary options since 2017, which keeps these platforms largely out. But crypto casinos like Roobet now offer prediction markets of their own.

So, is it gambling?

Courts will decide what the law calls it. I can tell you what it feels like: you put money on an outcome you don't control, you watch, you win or you lose, and you want to go again. That's the loop. If you're chasing it, call it what it is and get out.

Block it everywhere: how to block gambling sites on your phone and computer, and how to block gambling payments at your bank.

If you're struggling right now

• Thinking about suicide (US and Canada): call or text 988, any time.
• USA: the National Problem Gambling Helpline, 1-800-MY-RESET (1-800-697-3738).
• Canada: find support by province or territory.
• Chess vs. Gambling: chessvsgambling.org is a free community that uses chess as a healthy replacement for gambling, with a Discord you can join.
• Anywhere: Gambling Therapy offers free online support in multiple languages.

This article reflects my own research and opinions, not legal advice. This litigation is moving fast; it reflects public reporting and court decisions as of October 31, 2026.