Sports Prediction Markets: How US Event Contracts Work

Sports prediction markets let US residents buy and sell event contracts on game results, priced between $0.01 and $0.99 and settling at $1 if the outcome happens. They run on exchanges registered with the Commodity Futures Trading Commission (CFTC), so they open in states where sportsbooks are illegal. As of October 2026, though, two federal appeals courts have ruled that states may apply their gambling laws to sports contracts.

This hub explains the product, the maths and the law, then points to our guides on the six big US apps. It is informational: we do not list offers, hold no promo codes and are not paid by any of the companies named. The six apps covered here serve US residents only, while most of our readers live elsewhere, so the closing section covers what applies abroad, where a few international exchanges operate under tight country restrictions.

What is a sports prediction market?

A sports prediction market is an exchange where members trade yes-or-no contracts on a sports outcome, such as “Will the Chiefs win on Sunday?”. A contract pays $1 if the answer is yes and $0 if it is no. The market price, set by other traders rather than a bookmaker, reads directly as a probability: a 62-cent Yes price means the crowd gives the outcome about a 62% chance.

Every contract has two sides. Buying Yes at 62 cents is the mirror image of buying No at 38 cents, and the two prices always add up to roughly $1 before fees. You do not have to hold to the end, either. Sell a Yes contract at 70 cents after buying at 62 and you lock in 8 cents per contract, win or lose. That ability to exit early, at whatever price the order book offers, is the main practical difference from a fixed sportsbook ticket.

The exchange does not take the other side of your trade. It matches buyers and sellers and earns a fee on each match, which is why operators insist the product is a financial derivative and not a wager. State regulators and several courts disagree, and that argument (covered below) decides where the product can be offered.

How do event contracts differ from sportsbook bets?

The economic outcome can look identical, but the structure is different. A sportsbook sets a price, builds a margin into it and takes your money as the counterparty. An exchange lists contracts, lets members set prices against each other and charges a fee per contract. The table below compares the two models on the points that matter to a user.

Sportsbook readers who want the background on how bookmaker prices and margins work should start with our explainer on how betting odds and implied probability work. The same arithmetic converts any contract price into decimal or American terms, which helps when you compare the two markets.

Who regulates prediction markets: exchanges versus brokers?

Two federal licence types matter. A designated contract market (DCM) is the exchange that lists contracts and runs the order book, and a derivatives clearing organisation (DCO) guarantees settlement. A futures commission merchant (FCM) is a broker that holds customer money and routes orders to someone else’s exchange. An introducing broker is lighter still: it brings in customers but an FCM holds the funds.

This distinction explains the 2026 deal rush. A sportsbook brand that only holds an FCM licence must rent contracts from another exchange, such as Kalshi, CME Group or Crypto.com’s derivatives arm. Buying a DCM lets the brand write and list its own contracts. DraftKings bought Railbird in 2025 and launched its exchange, DKeX, on 26 June 2026. Underdog bought the Aristotle Exchange DCM and DCO in March 2026. Fanatics agreed on 27 July 2026 to buy Water Street Labs (a DCM) and CX Clearinghouse (a DCO) from BGC Group.

Registration does not mean the CFTC approves each sports contract in advance. Exchanges usually self-certify new contracts, and the agency can review them afterwards. You can check any firm’s registration on the National Futures Association’s BASIC database before you open an account.

Which are the main US sports prediction apps?

Six consumer brands dominate sports event contracts in late 2026: three sportsbook giants, two daily fantasy operators and one exchange that began life as a social sportsbook. Each one has its own guide on this site with dated state lists, fees and terms. The table summarises how each is built, using company announcements and the age statements published by the operators or reported from them.

Kalshi and Polymarket’s US exchange are not in the table because they are pure exchanges rather than sportsbook or fantasy brands, but Kalshi matters to everyone: it supplies PrizePicks and other partners, and it is the named party in most of the court cases. Robinhood, Coinbase and Crypto.com also offer sports contracts to their brokerage customers.

Why the sportsbook brands moved in

FanDuel and DraftKings can run their licensed sportsbooks only in states that legalised sports betting. Event contracts let them reach the large states without legal sports betting, notably California, Texas, Florida and Georgia, under federal rules. FanDuel said at launch that its sports contracts would run only where online sports betting is not legal, keeping the two products apart. That choice also limits the risk to its state licences if a regulator decides the two products are the same thing.

How do prices and fees work? A worked example

A contract price is a probability, and the fee is what turns a fair price into a slightly worse one. Kalshi publishes the most widely copied formula: a general trading fee of 0.07 x C x P x (1 – P), rounded up to the next cent, where C is the number of contracts and P the price in dollars. The fee peaks at 50 cents and shrinks towards the extremes. Other apps charge differently, so check each brand page.

Suppose you buy 100 Yes contracts on an NFL team at 40 cents (an illustrative price, not a live market).

• Cost of contracts: 100 x $0.40 = $40.00.
• Fee: 0.07 x 100 x 0.40 x 0.60 = $1.68.
• Total outlay: $41.68.
• If the team wins: you receive $100.00, a net gain of $58.32.
• If the team loses: you receive nothing and lose $41.68.
• Break-even probability: $41.68 / $100 = 41.68%, against the 40% the price alone suggests.

Now compare a sportsbook. A typical two-way market at -110 on both sides (decimal 1.909) implies 52.38% per side, or 104.76% in total, so the bookmaker’s built-in margin is about 4.5% of turnover. On the exchange in our example, the fee adds 1.68 percentage points to the break-even rate, and the bid-ask spread adds more if the market is thin. A 40-cent Yes paired with a 58-cent No (instead of 60) is a 2-cent spread that you pay when you cross it.

Two lessons follow. Long shots cost more in relative terms, because the fee falls more slowly than the price. And “zero-fee” headlines need reading closely: an app that charges nothing may still widen the spread or apply fees to some contract types only. A sportsbook’s price on the same outcome, with its margin removed, is the fairest benchmark.

Are sports prediction markets legal in every state?

No. Federal registration lets the exchanges operate nationwide in principle, but by October 2026 the courts had split. The 3rd Circuit sided with Kalshi against New Jersey on 6 April 2026 (2-1). The 9th Circuit ruled for Nevada on 28 August 2026 and the 6th Circuit for Ohio and Tennessee on 25 September 2026, holding that states may apply gambling law to sports contracts.

The practical effect is a patchwork. In Nevada, the major exchanges no longer offer sports contracts. In Ohio and Tennessee the state can now enforce its gambling law while rehearing petitions run. Elsewhere, states including Massachusetts, Maryland, Michigan, Washington, New York and Utah are in active litigation or enforcement, and apps switch sports contracts off state by state. Missouri is the latest front: Novig and Crypto.com’s NADEX both sued the state on 16 October 2026 after cease-and-desist letters.

What the Supreme Court petition could decide

With two circuits on one side and one on the other, a Supreme Court review is likely at some point. If the Court takes No. 26-299 and sides with the states, sports contracts would need state approval or a state licence, and the national model would shrink to non-sports markets. If it sides with Kalshi, state gambling law would largely fall away for CFTC-listed sports contracts. Nothing had been granted by 25 October 2026.

What the CFTC is doing

The agency’s June 2026 proposal sets a three-step test for contracts that “involve” gaming. According to law-firm summaries of the text, contracts settling on official scores, margins or season statistics would likely pass, while contracts on injuries, officiating decisions, discrete in-game actions or pre-collegiate sports would likely be barred. The October interim rule tries to draw a line between sportsbook wagers and listed event contracts. Gaming lawyers expect challenges to both.

For the state-by-state picture of licensed sportsbooks, which is a separate legal system, read our guide to where sports betting is legal in the US.

What are the age limits?

Federal rules do not set 21 as a minimum, so most exchanges accept traders from 18. That gap is one of the main points state regulators and sports leagues raise, and the 6th Circuit flagged it in September 2026. Operators set their own floors, and several apply the state’s sports-betting age instead.

• 18+: Kalshi, FanDuel Predicts, PrizePicks (most states), DraftKings Predictions (most states).
• 18+ with exceptions: Underdog requires 19 in Alabama and Nebraska and 21 in Arizona, Massachusetts and Virginia.
• 21+ everywhere: Novig and Fanatics Markets.

Expect identity checks (name, date of birth, address, the last digits of a Social Security number) and location checks on every session. Exchanges must know their customers under federal anti-money-laundering rules, and geolocation is how they switch sports contracts off in states where a court or regulator has acted.

How do you fund an account and get paid?

Funding works like a brokerage account, not a casino cashier. Bank transfer (ACH) and debit cards are the usual methods, and the payment list differs by app, so each brand guide gives its own. Winnings settle in dollars to your account balance once the result is official, and withdrawals go back to the funding method after identity checks.

Tax treatment is less familiar than for sportsbook winnings, because event-contract gains are reported through a brokerage-style account rather than a gaming ticket. Keep your own trade history and ask a tax adviser before filing.

Two habits protect you. First, look for deposit or spending limits in the app settings on day one and use them the way you would use the controls described in our safer betting guide. Second, read the market rules before trading, because the contract’s resolution source (the official league result, a specific data feed) decides edge cases such as postponed games or overtime.

Prediction markets versus social sportsbooks

Both products grew up in states without legal sports betting, and some brands have moved from one to the other. Novig retired its sweepstakes coins on 4 August 2026 and moved to dollar trading on its own exchange. Companies linked to Fliff and Onyx Odds applied to the National Futures Association for FCM registration on 12 August 2026.

The legal bases are different. A social sportsbook relies on sweepstakes law: you purchase play coins, receive sweepstakes coins as a bonus or by free mail-in request, and redeem sweepstakes winnings for prizes. A prediction market relies on federal derivatives law and trades in dollars from the start. States have been banning dual-currency sweepstakes since 2025, while prediction markets fight in the federal courts. Our guide to social and sweepstakes sportsbooks covers the coin model, state bans and redemption rules.

Can you use these apps outside the United States?

No. FanDuel Predicts, DraftKings Predictions, Fanatics Markets, Underdog, PrizePicks and Novig are US-only: they require a US address and check your location each session. Polymarket’s international exchange restricts or limits trading in dozens of countries, including the UK, France, Germany, Australia and Canada’s largest provinces, according to its own geoblock page.

In Great Britain, only operators licensed by the Gambling Commission may offer betting, and none of the US apps above is aimed at British residents. Most European regulators treat sports prediction markets as gambling, and several have blocked Polymarket. Readers outside the US who want to bet on sport should use a bookmaker licensed for their own country, and can compare the licences behind offshore sites with our bookmaker licence check.

If gambling or trading on sport stops being fun, US residents can call or text the National Council on Problem Gambling on 1-800-MY-RESET, free and confidential, 24 hours a day.

Frequently asked questions

Are sports prediction markets gambling?

Operators say no: they list event contracts under the Commodity Exchange Act and register with the CFTC. Courts are split. The 3rd Circuit sided with Kalshi in April 2026, while the 9th Circuit (28 August 2026) and 6th Circuit (25 September 2026) ruled that states may apply gambling law to sports contracts.

How old do you have to be to use a prediction market?

Most exchanges accept users from 18, including Kalshi and FanDuel Predicts. Novig and Fanatics Markets require 21 everywhere, and Underdog requires 19 in Alabama and Nebraska and 21 in Arizona, Massachusetts and Virginia. Sportsbooks require 21 in most states.

How much do prediction markets charge in fees?

It depends on the app. Kalshi’s published general fee is 0.07 x contracts x price x (1 – price), rounded up, so 100 contracts at 50 cents cost $1.75 in fees. Some apps advertise zero fees on certain markets, but the bid-ask spread is still a cost.

Which states block sports prediction markets?

It changes month to month. By October 2026 the major exchanges had stopped sports contracts in Nevada, Ohio and Tennessee could enforce their laws after the 6th Circuit ruling, and several states, including Massachusetts, Maryland, Michigan and Washington, were in litigation or enforcement. Each app lists its own exclusions.

What is the difference between an exchange and a broker?

An exchange, or designated contract market, lists contracts and matches orders. A broker, or futures commission merchant, holds your money and sends orders to an exchange. DraftKings, Underdog, Novig and Fanatics have bought or built exchanges so they can list their own contracts.

Can I use FanDuel Predicts or Kalshi from outside the US?

FanDuel Predicts and the other sportsbook-owned apps are US-only and verify your location. Kalshi and Polymarket run international products, but both restrict many countries, and national gambling regulators in Europe have blocked unlicensed prediction markets. Use a bookmaker licensed where you live.