Where the line falls in the US
Kalshi and the US version of Polymarket are federally regulated exchanges, and they argue that buying a contract from another user is trading, not betting against a house. The courts can't agree. Two federal appeals courts ruled in 2026 that states can treat sports contracts as gambling, a third ruled the other way, and the Supreme Court may have to settle it. That matters because about 80% of Kalshi's volume is on sports.
Fantasy apps fight a slightly different battle over skill. Top courts in New York and Illinois have ruled that paid daily fantasy is mainly skill, while the attorneys general of Texas and California call it gambling. PrizePicks' original pick'em games were called gambling by regulators in Florida, Michigan, New York and Illinois, and in 2025 it switched to games where you play against other users.
Outside the US
Most other countries don't accept the exchange argument. The UK, France and Spain treat prediction markets as gambling, and Polymarket is blocked or restricted in around 39 countries. In the UK, even a paid fantasy league with a prize pot funded by entry fees can need a betting licence unless it's run privately.
What the numbers say
Whatever the legal label, most users lose. Kalshi's own figures show more than 70% of its traders lose money, and on-chain studies of Polymarket find the same pattern. If you use these apps, treat the money you put in as money spent on entertainment.
Every topic in this group
- Is fantasy football gambling? Depends where you live
Is fantasy football gambling? A free league isn't. Paid daily fantasy depends on your state. Here's what US courts, state attorneys general and the UK Gambling Commission say.
- Is Kalshi gambling? Depends where you live
Is Kalshi gambling? It's a federally regulated exchange, but courts are split on its sports contracts. Here's where every major case stands in October 2026 and what Kalshi's own numbers say about losses.
- Is Polymarket gambling? Depends where you live
Is Polymarket gambling? In the US it's a regulated exchange, but states and many countries treat it as gambling. Here's its history, where it's blocked and how many traders lose.
- Are prediction markets gambling? Depends where you live
Are prediction markets like Kalshi and Polymarket gambling? US courts are split, and the Supreme Court may decide. Here's how they work, what courts and regulators have said, and how many users lose money.
- Is PrizePicks gambling? Depends where you live
Is PrizePicks gambling? It depends on your state. Here's what regulators have said, how the payouts work out, and what changed when PrizePicks switched to peer-to-peer play.