Is Polymarket legal in the United States? (2026 CFTC status)

The regulatory timeline

October 2020 — Polymarket launches

Polymarket went live in October 2020 on Polygon. US users could access it freely. Polymarket offered event contracts on political outcomes, crypto prices, and sports.

January 2022 — CFTC Order 22-09

The CFTC issued Order 22-09 against Blockratize, Inc. (Polymarket's operating entity) for operating an unregistered swap execution facility. The CFTC found:

Polymarket offered binary option contracts constituting "swaps" under the Commodity Exchange Act
It operated a trading platform for those swaps
US retail participants traded on the platform
Polymarket was not registered as a SEF (Swap Execution Facility) or DCM (Designated Contract Market)

The settlement terms:

$1.4 million civil monetary penalty
Wind down all non-compliant markets accessible to US persons
Block US IP addresses
Not solicit US users going forward

Polymarket complied immediately. All US IPs have been blocked since February 2022.

2023–2024 — Expansion outside the US

Polymarket grew dramatically globally during the 2024 US election cycle. Volume on the presidential outcome exceeded $3.6 billion. Mainstream media (FT, NYT, WSJ) routinely cited Polymarket prices alongside polls.

This created political attention on Polymarket even though US users were technically locked out. Foreign users were trading on US political outcomes, which some US political figures characterized as inappropriate.

October 2024 — Kalshi prevails on political markets

Separately, Kalshi sued the CFTC over its rejection of Kalshi's proposed political event contracts. The D.C. District Court and then the Fifth Circuit ruled in Kalshi's favor (October 2024). Kalshi listed political event contracts. Trading volumes surged during the election.

This ruling clarified — for CFTC-registered DCMs — that political outcomes are legitimate derivatives subject to CFTC authority. It did not, however, apply to Polymarket, which is not registered.

November 2024 — CFTC no-action letter

The CFTC issued a no-action letter clarifying certain event contract structures. This has been interpreted in various ways but does not retroactively legalize Polymarket's US operations or provide a pathway for Polymarket to resume without formal registration.

December 2024 — FBI raid on Polymarket CEO

On December 11, 2024, the FBI raided Polymarket CEO Shayne Coplan's home in New York. The raid was widely reported as related to the 2024 election volume and possible US user activity. No charges have been filed as of April 2026.

The raid was politically contentious. Critics framed it as a lame-duck action by the outgoing Biden administration; the Trump administration subsequently indicated it would not pursue Polymarket-related prosecution against the CEO individually.

Current status (April 2026)

Polymarket continues to block US IPs. The company has not filed for CFTC DCM registration. The December 2024 raid has not resulted in charges, but Polymarket has maintained its conservative posture on US access.

Bottom line: US residents cannot legally use Polymarket via the main app. Using VPNs to circumvent this violates terms of service and creates legal and tax complications.

What the CFTC could do in principle

Three legal pathways could change Polymarket's US status:

Pathway 1: Polymarket registers as a DCM

This would make Polymarket fully legal for US retail. Requirements:

Centralized clearing and margin oversight
Full KYC for US users
CFTC surveillance of all markets
Segregated customer fund custody

This is fundamentally at odds with Polymarket's decentralized architecture. The smart contracts don't have a "custodian" in the regulatory sense. Redesigning to fit DCM rules would essentially mean building a parallel US Polymarket on traditional rails — similar to what Kalshi already is.

Low probability of happening.

Pathway 2: Polymarket registers as a SEF or gets no-action relief

SEFs are institutional-focused and don't cleanly cover retail prediction markets. Getting narrow no-action relief for specific market types is possible but would leave Polymarket heavily constrained. Also low probability.

Pathway 3: Regulatory change that accommodates decentralized exchanges

Some in Congress and the CFTC have suggested a framework for decentralized exchanges that would permit US user access without traditional registration. This is speculative and the timeline is unclear — even if adopted, it would be years away.

The user's perspective

For a US resident:

Can you legally trade on Polymarket today? No.
Can you be criminally prosecuted for using Polymarket with a VPN? Highly unlikely for retail users. Enforcement has targeted the operator, not individual traders.
Do you owe US tax on any Polymarket gains? Yes. US persons owe tax on worldwide income. Polymarket doesn't issue 1099s, so you're on your own for correct reporting.
Will using Polymarket affect your ability to use Kalshi? No. They're separate platforms. Nothing stops a user from having both.

Why VPN usage doesn't solve the problem

A VPN changes your apparent IP but doesn't change your nationality or bank account. Here's the usual flow:

You use a VPN with a non-US IP to access Polymarket.
You sign up with email or a wallet.
You deposit USDC. This works.
You trade. This works.
You want to withdraw $10k+ to fiat. You use MoonPay or Onramper's offramp.
MoonPay asks for ID. You provide a US driver's license or passport.
MoonPay identifies you as US. They may decline, or they may report to Polymarket.
Polymarket reviews the account and restricts it to withdrawal-only.

The longer you trade, the more likely the detection. And you're still on the hook for US tax filing with zero help from the platform.

The legal alternative: Kalshi

Kalshi is the prediction market US residents should actually use. It:

Is a CFTC-registered DCM
Is legal in all 50 states
Issues 1099 tax forms
Accepts USD via ACH, wire, or debit card
Covers politics, economics, sports, weather, and crypto markets

For the details, see What is Kalshi? and How to sign up for Kalshi.

Kalshi's market universe is somewhat smaller than Polymarket's (CFTC-approved categories only), but for most US users, the tradeoff is obviously worthwhile given the legal and tax simplicity.

State-level enforcement

Individual US states can't add extra restrictions to Kalshi because federal CFTC authority preempts state gambling law for designated event contracts. Polymarket is in a different position — it's not CFTC-regulated at all, so state gambling laws apply in principle. In practice, no state has pursued enforcement against individual Polymarket users; enforcement has targeted the platform operator.

New York, Washington, and Utah have the strictest online gambling regimes. VPN-based Polymarket use in those states would create the most legal risk. Access is already blocked at Polymarket's end.

The tax question, specifically

US users who trade on Polymarket (via VPN or otherwise) owe tax on every winning position. Key points:

Gains are ordinary income or short-term capital gains depending on holding pattern.
Polymarket issues no 1099. You're responsible for tracking all trades, computing gains, and reporting.
Losses have limited deductibility for recreational gamblers; better for pattern traders but still complicated.
Audit risk is elevated because of the unregistered-platform angle. IRS flags returns where a taxpayer reports foreign crypto gains without traditional broker documentation.

For detailed US tax analysis, see our sister site polytaxes.com.

Enforcement posture for individual users

The CFTC's enforcement history against event-contract platforms is clear: penalties go to operators, not to retail users. The CFTC has never pursued individual retail traders for using Polymarket or similar platforms.

However:

The IRS can pursue tax evasion based on Polymarket gains.
State gambling regulators could in principle target users — no known cases, but possible.
Payment-rail detection (bank seeing crypto-to-USD flows tied to Polymarket) can lead to account flags or closures.

The cumulative risk is mostly tax and banking friction, not criminal prosecution. But it's not zero.

The December 2024 FBI raid: what we know

Public details on the December 11, 2024 raid are limited. Reporting indicated:

The raid targeted Polymarket CEO Shayne Coplan's Manhattan residence
FBI seized phones and other electronics
No charges have been filed
The incident has been characterized by multiple commentators as politically-motivated retaliation for 2024 election market activity

The incoming Trump administration signaled it would not pursue Polymarket or Coplan criminally. As of early 2026, no prosecution has materialized. The matter appears closed or dormant, though not formally resolved.

This does not change Polymarket's legal status for US users. The platform remains off-limits by its own compliance posture, regardless of how the CEO's personal situation resolves.

Recap

Polymarket is not legally available to US residents as of April 2026.
The 2022 CFTC settlement is the authoritative US restriction. Polymarket has not registered as a DCM.
VPNs create practical, tax, and legal complications without providing a reliable path.
Kalshi is the CFTC-regulated US alternative — legal, USD-native, 1099-issuing.

If you're a US resident wanting prediction market exposure, use Kalshi. Skip the Polymarket complexity.

FAQ

Frequently asked questions

Is Polymarket illegal to use in the US?+

Polymarket blocks US IPs as a term of its 2022 CFTC settlement. US residents using VPN to bypass violate Polymarket's terms. Individual users face primarily tax and banking risk rather than criminal prosecution.

Why did Polymarket settle with the CFTC?+

The CFTC determined Polymarket was operating an unregistered swap execution facility offering binary options to US retail. Polymarket settled for $1.4M and blocked US users.

What happened with the FBI raid?+

In December 2024, the FBI raided the CEO's home in connection with 2024 election market activity. No charges have been filed. The incoming administration indicated no intent to pursue prosecution.

Is Kalshi really legal in all 50 states?+

Yes. Kalshi's CFTC DCM designation preempts state gambling laws for federally-designated event contracts. Legal in all 50 states and DC.

What if I already have funds on Polymarket as a US user?+

You can typically withdraw to your own Polygon wallet without full offramp KYC. Larger fiat offramps can trigger account review. Consult polytaxes.com on how to handle tax reporting for existing positions.

Could Polymarket return to the US?+

Only by registering as a CFTC DCM or obtaining specific regulatory relief. No public indication either is in progress.

Can I use Polymarket if I'm traveling to the US from abroad?+

Your home-country access doesn't disappear because you fly into the US, but US IPs are blocked — you'd need to use a VPN to your home country, which violates terms. Better to wait until you're home.

Do tribal lands in the US have different rules?+

Tribal gambling compacts apply to physical casinos, not to federally-regulated event contracts. Polymarket is blocked for tribal lands just as elsewhere in the US. Kalshi is available.