Is Kalshi Legal? Complete State-by-State Guide
Complete guide to Kalshi's legal status in the United States. Learn which states allow Kalshi trading, CFTC regulations, and recent legal developments.
Yes, Kalshi is Legal
Kalshi is the first and only federally regulated prediction market exchange in the United States, approved by the Commodity Futures Trading Commission (CFTC). It's available in nearly all 50 states.
Understanding Kalshi's Legal Status
Kalshi operates as a designated contract market (DCM) under the oversight of the Commodity Futures Trading Commission (CFTC). This means it follows the same regulatory framework as major futures exchanges like the CME.
In practical terms, this gives Kalshi users several important protections:
- Customer funds are segregated and protected
- The exchange must maintain capital reserves
- Trading rules and market integrity are monitored
- Disputes have regulatory recourse
- Tax reporting is standardized (1099 forms)
Kalshi's Regulatory Journey
Here's how Kalshi achieved its legal status:
2018: Founding
Kalshi founded by Tarek Mansour and Luana Lopes Lara, former Citadel and Goldman Sachs employees.
2020: CFTC Approval
CFTC approves Kalshi as a designated contract market (DCM), the first prediction market to achieve this status.
2021: Public Launch
Kalshi launches publicly with weather, economic, and entertainment markets.
2024: Election Markets Approved
After a federal court victory, Kalshi wins the right to offer election prediction markets, a major milestone for the industry.
2025-2026: Expansion
Continued growth with new market categories, increased trading volume, and expanded state availability.
State-by-State Availability
Kalshi is available in most US states. Here's the current breakdown:
Available States (50)
Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming, District of Columbia
Restricted States (1)
Montana
⚠️ Important Note
State availability may change. Always verify on Kalshi.com during signup.
Is Kalshi Gambling?
This is one of the most common questions about Kalshi, and the answer is legally and technically "no."
Legal Classification
Kalshi operates as a derivatives exchange, not a gambling platform. The CFTC regulates it as a financial market where users trade "event contracts" — a specific type of binary option.
Key Differences from Gambling
| Aspect | Kalshi (Event Contracts) | Gambling |
|---|---|---|
| Regulator | CFTC | State gaming commissions |
| Tax Treatment | Capital gains (Section 1256) | Gambling income |
| House Edge | None (peer-to-peer) | Built into odds |
| Exit Options | Can sell position anytime | Usually locked in |
| Price Discovery | Market-based | Set by house |
While prediction markets and gambling both involve wagering on outcomes, the regulatory and legal frameworks are completely different. Kalshi is treated as a financial exchange, not a gambling operation.
Election Markets: The 2024 Breakthrough
One of the most significant legal developments for Kalshi was the 2024 federal court ruling that allowed election prediction markets.
The Legal Battle
The CFTC initially rejected Kalshi's proposal for political event contracts, citing concerns about election integrity. Kalshi sued, and a federal appeals court ruled in their favor, allowing election markets to proceed.
What This Means
US residents can now legally trade on:
- Presidential election outcomes
- Congressional races (Senate, House)
- State and local elections (where offered)
- Primary and caucus results
This ruling established an important precedent: prediction markets on political events can operate legally in the US under proper regulatory oversight.
Tax Implications
One of the benefits of Kalshi's regulated status is clear tax treatment:
1099-B Forms
Kalshi provides 1099-B forms for all users with taxable activity. This makes tax reporting straightforward compared to offshore or crypto-based platforms.
Section 1256 Treatment
Kalshi contracts may qualify for Section 1256 tax treatment, which means:
- 60% of gains taxed at long-term rates
- 40% of gains taxed at short-term rates
- This applies regardless of holding period
- Can result in significant tax savings
For detailed tax guidance, see our Prediction Market Tax Guide.
Kalshi vs Other Options
How does Kalshi's legal status compare to alternatives?
| Platform | US Legal | Regulation | Tax Forms |
|---|---|---|---|
| Kalshi | ✓ Yes | CFTC (Federal) | ✓ 1099-B |
| Polymarket | ✗ No | None (offshore) | ✗ None |
| PredictIt | ⚠️ Closing | No-action letter | ✓ 1099 |
| Sports Betting | ⚠️ State-by-state | State gaming | ✓ W-2G |
Frequently Asked Questions
Is Kalshi legal in the US?
Yes, Kalshi is legal in the United States. It is regulated by the Commodity Futures Trading Commission (CFTC) as a designated contract market (DCM), making it the first and only federally regulated prediction market exchange in the country.
Which states can't use Kalshi?
As of 2026, Kalshi is available in most US states. However, a small number of states have restrictions on event contract trading. Always check Kalshi's current state availability when signing up.
Is Kalshi gambling?
Legally, no. Kalshi operates as a regulated derivatives exchange, not a gambling platform. The CFTC regulates it as a financial market, and profits are treated as capital gains, not gambling winnings.
Can I use Kalshi for election betting?
Yes, after a landmark court ruling in 2024, Kalshi won the right to offer election markets. You can trade on federal election outcomes legally on Kalshi.
How are Kalshi winnings taxed?
Kalshi provides 1099-B forms for tax reporting. Profits are generally treated as short-term or long-term capital gains under Section 1256 contracts, which may qualify for the 60/40 tax treatment.
Conclusion
Kalshi is fully legal in the United States, regulated by the CFTC as a designated contract market. It provides US residents with a legitimate, regulated way to trade on event outcomes—something that wasn't possible just a few years ago.
The 2024 election markets ruling was a watershed moment, establishing that prediction markets can operate legally on political events. As the regulatory landscape continues to evolve, Kalshi remains the gold standard for compliant prediction market trading in the US.
Ready to get started? Check out our complete Kalshi guide for step-by-step instructions.