What is Prediction market?
A prediction market is a platform where users trade contracts that pay out according to the outcome of a future event, with prices reflecting the market's estimate of its probability.
A contract on 'Will X happen?' typically pays 1 dollar if yes and nothing if no. A price of 62 cents implies a 62% chance. Users can buy, sell or hold contracts until the event is resolved. Markets cover elections, economic data, weather and, increasingly, sports.
In the US, platforms such as Kalshi operate as exchanges regulated by the Commodity Futures Trading Commission (CFTC), arguing that federal rules override state gambling laws. Many states disagree, particularly over sports contracts. In 2026, federal appeals courts split: the Third Circuit sided with Kalshi in April, while the Sixth Circuit ruled in September that its sports contracts are subject to state gaming law.
The dispute is one of the most significant legal questions facing US betting.