Are Prediction Markets Legal in California? (2026 Guide)

On this page · 10

1. Court update: where the legal fight stands (as of September 30, 2026)
2. Are prediction markets legal in California?
3. Why isn't this the same as sports betting?
4. What happened with California's sports betting ballot measures?
5. Which prediction market platforms are legal in California?
6. What can I actually trade from California?
7. Are there ongoing legal challenges I should know about?
8. Do I need to pay taxes on prediction market winnings in California?
9. How do I get started?
10. What changed: California legal timeline

Yes, for now. Prediction markets operate in California as CFTC-regulated event contracts under federal commodities law, and Kalshi, Polymarket, ProphetX, OG and Novig accept California residents today (Rebet does not). For sports contracts the legal basis is contested: the Ninth Circuit, whose rulings bind California's federal courts, ruled against Kalshi at the preliminary stage in August 2026, and three petitions to the Supreme Court are pending (Nos. 26-299, 26-338 and 26-344; none granted). Non-sports contracts are not at issue in these cases.

Every ruling and filing, with dates, is in our full California change log.

If you live in California and you have ever tried to place a legal online bet, you already know the answer: you cannot. No DraftKings. No FanDuel. No BetMGM. The ballot initiatives that would have changed that failed, and the political will to revisit them is, at best, dormant.

Court update: where the legal fight stands (as of September 30, 2026)

The legal status of sports event contracts is not settled. Federal appeals courts are split on whether states can apply their gambling laws to them. All three rulings below were made at the preliminary-injunction stage, not as final judgments.

• Ninth Circuit (August 28, 2026, Nevada): ruled at the preliminary stage that Kalshi (opens in a new tab) is unlikely to show federal law blocks Nevada's gambling laws for its sports contracts, and ruled against Robinhood and Crypto.com (opens in a new tab) the same day. Ninth Circuit rulings bind federal courts in California. Kalshi has asked for a rehearing. Opinion (opens in a new tab)
• Sixth Circuit (September 25, 2026, Ohio and Tennessee): reached the same preliminary conclusion. Opinion (opens in a new tab)
• Third Circuit (April 6, 2026, New Jersey): ruled 2 to 1 the other way, finding Kalshi likely to show that federal law preempts New Jersey's gambling laws. Opinion (opens in a new tab)
• Supreme Court: New Jersey (No. 26-299), Robinhood (No. 26-338) and Crypto.com (No. 26-344) have filed petitions. None has been granted yet.
• California tribal lands: on September 16, 2026 the Ninth Circuit found California tribes likely to succeed in their claim against Kalshi's sports contracts on tribal lands (Blue Lake Rancheria v. Kalshi). Bloomberg Tax reported on September 24 that Kalshi has since disabled its markets on three tribes' lands. Opinion (opens in a new tab)

What this means for you: as of September 30, 2026 the platforms still accept California users, and contracts on politics, economics, weather and culture are not at issue in these cases. Sports contracts carry the most legal uncertainty and could be restricted if the courts or regulators act. This is general information, not legal advice.

But here's what most California sports fans haven't caught onto yet: there is a legal, federally regulated way to take positions on sports, politics, economics, and culture from California. And it has nothing to do with sportsbooks. It's called a prediction market, and the legal framework is settled enough today that an estimated $63 billion in trading volume moved through these platforms globally in 2025, with monthly volumes hitting $26 billion by January 2026.

This guide explains why prediction markets are legal in California, which platforms you can use, what you can trade, and where the ongoing legal battles actually matter.

Are prediction markets legal in California?

Yes. Prediction markets are legal in California.

The technical answer: prediction markets operate as event contracts regulated by the US Commodity Futures Trading Commission (CFTC) under federal commodities law. Event contracts are available in most US states, including California, which has not legalized online sports betting. Whether federal law overrides state gambling law for sports contracts is now disputed in the federal courts.

The practical answer: a California resident can open an account on Kalshi, Polymarket, ProphetX, Novig, or Crypto.com today. They can verify identity, fund the account from a US bank, and trade event contracts on real outcomes in real markets. These platforms are not operating in a gray area. They are operating under federal law.

Why isn't this the same as sports betting?

Prediction markets differ from sports betting because participants trade exchange-listed contracts with fluctuating prices based on aggregate information rather than wagering against odds.

This is the question that trips up almost every Californian who hears about prediction markets for the first time. If I can trade a contract on whether the Lakers win the NBA Finals, how is that different from betting on the Lakers?

The legal answer comes down to the product, the regulator, and the framework:

The product is different. A sportsbook offers you a wager against a house that sets the odds and takes the other side. A prediction market offers you an event contract: a binary financial instrument that pays $1 if the event happens and $0 if it doesn't. You're not wagering; you're trading a contract with other market participants.

The regulator is different. Sportsbooks are regulated at the state level by state gaming commissions. California does not have a gaming commission for online sports betting because online sports betting is not legal here. Prediction markets are regulated federally by the CFTC, the same agency that regulates commodities futures, options, and swaps.

The legal framework is different. Sports betting operates under state gambling laws. Event contracts operate under the Commodity Exchange Act (opens in a new tab), which is federal law. The platforms argue that federal law preempts conflicting state law; for sports contracts, the federal appeals courts are split.

Is the end-user experience similar in some ways? Yes. Does that make them legally equivalent? No. The whole reason Kalshi, Polymarket, and other platforms spent years securing CFTC registration was to establish a different legal identity from sportsbooks. It worked.

What happened with California's sports betting ballot measures?

Two sports-betting initiatives appeared on California's November 2022 ballot:

Proposition 26 was backed by California's gaming tribes and would have authorized in-person sports betting at tribal casinos and racetracks. It failed.

Proposition 27 was backed by major commercial sportsbooks, DraftKings, FanDuel, and others, and would have authorized online sports betting statewide. It failed by more than 60 points, one of the widest ballot defeats in California history.

Combined, the two campaigns spent over $450 million: the most expensive ballot fight in state history. Both lost. California remains one of the largest US states without legal online sports betting, and there has been no serious legislative effort to revisit the question since.

For California sports fans, that left three options: drive to Nevada, use an offshore sportsbook that operates outside US consumer protection law, or settle for fantasy sports. Prediction markets created a fourth, legal option. That's the entire reason this guide exists.

The sportsbook ballot measures failed. Prediction markets never needed California's ballot in the first place.

Which prediction market platforms are legal in California?

Here are the platforms we cover and where each stands for California residents today:

Kalshi: Our #1 overall pick for California traders.

Polymarket US: Our #2 pick. Polymarket US lists politics, culture, and sports markets through its CFTC-regulated US exchange.

OG by Crypto.com: Our #4 pick. CFTC-regulated event contracts from Crypto.com. Its current offer is in the offer box.

Novig: Novig is #5 on our scorecard. It is a peer-to-peer sports exchange available in California.

Sleeper: A fantasy and pick'em app built around group chats, not a CFTC-regulated exchange. Check the Sleeper app for what it offers in California.

Chalkboard: A pick'em-style player-prop app, not a CFTC-regulated exchange. Check the Chalkboard app for what it offers in California.

Rebet: A social sports app with a younger audience profile. Not available to California residents.

Crypto.com (via OG): CFTC-regulated event contracts offered inside the Crypto.com app through its OG-powered exchange. Legal in California, best suited for existing Crypto.com users.

Each of these operates under federal commodities law, not state gambling law. For a full comparison of strengths and trade-offs, see our platforms index.

What can I actually trade from California?

Event contracts cover a much broader surface than traditional sports betting:

Sports: game winners, championship futures, player props, season totals, tournament outcomes. The 2026 World Cup will be the largest sports event on prediction markets this year.

Politics: election outcomes, primary races, control of Congress, presidential approval ratings, state-level races.

Economics: Federal Reserve (opens in a new tab) rate decisions, CPI and jobs data, GDP releases, recession probabilities.

Culture and entertainment: Oscars, Emmys, Grammys, box-office numbers, music chart positions.

Crypto: Bitcoin price targets, Ethereum levels, on-chain milestones.

Corporate and macro: regulatory outcomes, M&A completions, geopolitical events.

For a walk-through of how these contracts actually work mechanically, start with our event contracts explainer.

Are there ongoing legal challenges I should know about?

Yes, and being honest about them is important. The legal landscape is settled enough that the major platforms operate openly in California, but it is not 100% finalized.

Several state attorneys general: including in New Jersey, Massachusetts, Nevada, and Maryland: have sent cease-and-desist letters or initiated court actions against specific prediction market operators, particularly around sports event contracts. They argue that sports contracts look too much like sportsbook wagers and should be regulated as gambling.

The CFTC has defended its federal jurisdiction, but the federal appeals courts are now split: the Third Circuit sided with Kalshi, while the Ninth and Sixth Circuits sided with the states at the preliminary stage. Supreme Court petitions have been filed (Nos. 26-299, 26-338 and 26-344); none has been granted yet.

California's attorney general has not sued the major platforms or sent them cease-and-desist letters, according to press reports. His office has, however, joined multistate court briefs backing other states' authority over sports event contracts, seven times by June 2026. California tribes, who were among the most vocal opponents of the 2022 sports betting ballot measures, sued Kalshi in 2025 over sports contracts offered on tribal lands, and the Ninth Circuit sided with two of them at the preliminary stage in September 2026.

The risk to be aware of: if a federal court or the Supreme Court narrows CFTC jurisdiction over sports contracts specifically, the universe of tradable markets could shrink. The platforms have all indicated they would adapt rather than exit the market. Non-sports contracts (politics, economics, culture) would remain unaffected.

Do I need to pay taxes on prediction market winnings in California?

California residents must pay state and federal income taxes on prediction market winnings, though the IRS hasn't said how event contracts are classified.

Yes. Gains from event contracts are taxable. How they're classified federally (gambling income, capital gains or Section 1256) is unsettled: the IRS hasn't issued guidance on event contracts.

The IRS hasn't said how event contracts are classified: gambling income, capital gains and Section 1256 are all argued. Losses can typically offset gains but the rules get technical. This is one area where "ask a tax professional" is not a cop-out. It's the right answer. Keep records of every trade. Your platform will provide a year-end summary. For a deeper walk-through of the competing federal treatments and platform-specific records, see our California prediction market tax guide.

How do I get started?

Four steps:

Step	Description
Pick a first platform.	For most California traders, Kalshi is the right starting point, broadest markets, longest regulatory track record. Add specialty platforms (ProphetX for sports only, Novig for setting your own price) as your interests narrow.
Open and fund the account.	Identity verification takes minutes. Funding from a US bank or debit card is usually instant.
Start small.	Your first trade should be one you'd happily lose. The point is to internalize the mechanic: price equals probability, buy low and sell high or hold to resolution. Not to make money on day one.
Trade responsibly.	Federal regulation makes the venue safer. It does not change the underlying risk that you can lose money. If it stops being fun, take a break. Call 1-800-GAMBLER or visit ncpgambling.org (opens in a new tab).

For a deeper mechanical walk-through, our event contracts explainer covers exactly how contracts, pricing, and resolution work. For a side-by-side cost breakdown of the two largest platforms, see Kalshi vs Polymarket fees. For World Cup-specific context, see our World Cup 2026 guide.

What changed: California legal timeline

Dated court rulings, regulator actions and state moves that affect prediction markets in California, newest first. Each entry links to its source.

1. October 9, 2026

   CFTC issues interim final rule excluding casino-style gambling products from the definition of swap

   The CFTC issued an interim final rule writing into its regulations its position that "casino-style gambling products", such as wagers placed at sportsbooks and on casino games, are not swaps. The rule is final but not yet in effect: it takes effect when it is published in the Federal Register, and it had not been published there as of October 13, 2026.

   Source: CFTC press release 9309-26 (opens in a new tab)

2. October 9, 2026

   CFTC proposes to include event contracts in the definition of swap

   In a separate notice of proposed rulemaking, the CFTC proposed to define "swap" expressly to include event contracts, including those based on sports, politics, cultural and weather-related events. This is a proposal, not a final rule: public comments are due 30 days after it is published in the Federal Register.

   Source: CFTC press release 9310-26 (opens in a new tab)

3. October 8, 2026

   Ninth Circuit mandate issued in the tribes' case against Kalshi

   The Ninth Circuit issued its mandate in Blue Lake Rancheria v. Kalshi (N.D. Cal. No. 3:25-cv-06162), which returns the case to the district court. The district court set a status conference for October 21, 2026. No injunction has been entered.

   Source: CourtListener docket, Blue Lake Rancheria v. Kalshi Inc. (opens in a new tab)

4. September 25, 2026

   Sixth Circuit rules against Kalshi in Ohio and Tennessee appeals

   The Sixth Circuit held that Kalshi had not shown that federal commodities law overrides Ohio or Tennessee gambling laws for its sports event contracts. The ruling is at the preliminary-injunction stage and covers Ohio, Tennessee, Kentucky and Michigan, not California.

   Source: U.S. Court of Appeals for the Sixth Circuit (opinion) (opens in a new tab)

5. September 24, 2026

   Kalshi disables its markets on three California tribes' lands

   Bloomberg Tax reported that Kalshi told a federal court it had voluntarily switched off its prediction markets on the lands of three California tribes, following the Ninth Circuit ruling of September 16.

   Source: Bloomberg Tax (opens in a new tab)

6. September 16, 2026

   Ninth Circuit sides with two California tribes against Kalshi

   In Blue Lake Rancheria v. Kalshi, the court found the tribes likely to succeed on claims that Kalshi sports contracts offered on their lands violate the Indian Gaming Regulatory Act. It sent the case back to the district court to weigh the remaining injunction factors.

   Source: U.S. Court of Appeals for the Ninth Circuit (opinion) (opens in a new tab)

7. September 14, 2026

   Crypto.com reported to have asked the Supreme Court to review the Ninth Circuit ruling

   Sports Betting Dime reported that Crypto.com filed a petition asking the U.S. Supreme Court to decide whether federal commodities law overrides state regulation of sports event contracts.

   Source: Sports Betting Dime (opens in a new tab)

8. September 10, 2026

   Kalshi seeks Ninth Circuit rehearing; Robinhood petitions the Supreme Court

   Sports Betting Dime reported that Kalshi asked the full Ninth Circuit to rehear its Nevada case, and that Robinhood asked the U.S. Supreme Court to review the same ruling.

   Source: Sports Betting Dime (opens in a new tab)

9. September 2, 2026

   New Jersey asks the Supreme Court to review the Kalshi ruling

   New Jersey's Attorney General filed a petition asking the Supreme Court to decide whether prediction markets can offer sports contracts without following state sports-gambling laws. The Court has not yet said whether it will hear the case.

   Source: New Jersey Office of the Attorney General (opens in a new tab)

10. August 28, 2026

    Ninth Circuit rules for Nevada regulators in Kalshi case

    In KalshiEX v. Assad, a three-judge panel found Kalshi had not shown that federal commodities law likely overrides Nevada gaming rules for its sports event contracts. It is a preliminary-stage ruling. Ninth Circuit rulings bind federal courts in California.

    Source: U.S. Court of Appeals for the Ninth Circuit (opinion) (opens in a new tab)

11. August 13, 2026

    Class action over DraftKings Predictions filed in California federal court

    Event Horizon, quoting SBC Americas, reported a proposed class action alleging that DraftKings offers illegal sports betting through its prediction market product and seeking to block it in California.

    Source: Event Horizon (opens in a new tab)

12. June 12, 2026

    California Attorney General joins multistate brief against Kalshi

    Attorney General Rob Bonta joined 37 other attorneys general in a Sixth Circuit brief supporting Ohio's authority to enforce its gambling laws against Kalshi. His office said it was the seventh such multistate brief California had joined.

    Source: California Attorney General (opens in a new tab)

13. June 10, 2026

    CFTC proposes a framework for sports and other event contracts

    The CFTC published a proposed rule setting out how it would evaluate event contracts involving gaming and other listed activities, including contracts on sporting events. The proposal was opened for public comment and is not final.

    Source: CFTC press release 9249-26 (opens in a new tab)

14. April 6, 2026

    Third Circuit sides with Kalshi against New Jersey regulators

    A divided Third Circuit panel upheld an injunction blocking New Jersey from enforcing its gambling laws against Kalshi's sports event contracts. The Ninth and Sixth Circuits later reached the opposite result.

    Source: U.S. Court of Appeals for the Third Circuit (opinion) (opens in a new tab)

15. March 27, 2026

    Governor Newsom extends insider-betting ban for state officials to prediction markets

    An executive order extended existing bans on state officials profiting from inside knowledge so that they cover prediction markets. It applies to state officials and appointees, not to the platforms themselves.

    Source: Office of the Governor of California (opens in a new tab)

16. March 18, 2026

    California lawmakers announce bill on prediction market ads to minors

    CDC Gaming reported that Assemblymembers Mia Bonta and Pilar Schiavo announced a bill to bar fantasy sports and prediction market apps from advertising to minors or letting them use the services. It has not become law. The date shown is the report date.

    Source: CDC Gaming (opens in a new tab)

17. November 10, 2025

    Federal judge denies California tribes' bid to block Kalshi on tribal lands

    CDC Gaming reported that a federal district judge denied a preliminary injunction sought by three California tribes against Kalshi's sports event contracts on their lands. The Ninth Circuit partly reversed this ruling in September 2026.

    Source: CDC Gaming (opens in a new tab)

18. July 22, 2025

    Three California tribes sue Kalshi and Robinhood

    Event Horizon reported that the Blue Lake Rancheria, Chicken Ranch Rancheria and Picayune Rancheria sued in the Northern District of California, alleging that sports event contracts offered on their reservations violate the Indian Gaming Regulatory Act.

    Source: Event Horizon (opens in a new tab)

This is a factual summary, not legal advice.

Frequently asked questions

Are prediction markets legal in California?

Yes, for now. They operate as CFTC-regulated event contracts under federal commodities law, and platforms such as Kalshi, Polymarket, ProphetX, OG and Novig accept California residents (Rebet does not). For sports contracts, whether state gambling law can also apply is being fought in the federal courts, which are split.

Why isn't this the same as sports betting?

Sports betting is regulated at the state level under gambling law. Prediction markets are regulated federally by the CFTC as event contracts, which are financial instruments. Different product, different regulator, different legal framework.

Did California legalize online sports betting?

No. Propositions 26 and 27 both failed in November 2022. California has no legal online sports betting, and there is no active legislative effort to change that.

Can I use Kalshi from California?

Available, dispute pending (as of October 13, 2026). Kalshi is a CFTC-regulated Designated Contract Market available in 47 states plus D.C., including California. Sign up takes under ten minutes.

Can I use Polymarket from California?

Available, dispute pending (as of October 13, 2026). Polymarket US, its CFTC-regulated app, opened to US users in December 2025 and accepts California residents (Polymarket's minimum age is 18; we recommend 21+). It trades in US dollars.

What can I trade from California?

Sports outcomes (including all World Cup 2026 markets), election results, economic data, Oscars and Emmys, crypto price targets, and more. Event contract coverage is broader than a traditional sportsbook.

Is this going to stay legal?

The federal legal framework is settled enough that the major platforms operate openly today. Ongoing state-level challenges and future Supreme Court review could narrow the scope of sports contracts specifically, but a total shutdown of prediction markets is highly unlikely. Non-sports markets face minimal legal risk.

Do I pay California state tax on winnings?

Yes. Gains from event contracts are taxable; the IRS hasn't said how they're classified. Keep records and consult a tax professional for your specific situation.

What's the minimum age?

21+ across platforms. Each platform's exact age requirement is listed at sign-up.

Are offshore sportsbooks legal in California?

No. Offshore sportsbooks operate outside US regulatory oversight and are not a legal option for California residents. CFTC-regulated prediction markets are the legal alternative.

Which prediction market platform has the highest rating for California residents?

Kalshi has our highest rating for California residents, and Polymarket US is #2. ProphetX is #3 and our pick for sports, and OG by Crypto.com is #4. Kalshi provides a profit-and-loss statement for your trades; for Polymarket US, keep the app's trade history.

Why were Propositions 26 and 27 relevant to prediction markets?

Propositions 26 and 27 failed to pass in 2022, which meant online sportsbooks remained illegal in California. However, prediction markets utilize event contracts regulated by the CFTC at the federal level. This regulatory distinction allows Californians to legally trade event outcomes even though traditional sports betting apps cannot operate in the state.