Introduction The U.S. prediction market landscape has evolved dramatically since 2024. Platforms like Kalshi and PredictIt now allow users to trade event contracts on political outcomes — fromIntroduction The U.S. prediction market landscape has evolved dramatically since 2024. Platforms like Kalshi and PredictIt now allow users to trade event contracts on political outcomes — from
Kalshi vs. PredictIt: Comparing US Political Betting Markets
Introduction
The U.S. prediction market landscape has evolved dramatically since 2024. Platforms like Kalshi and PredictIt now allow users to trade event contracts on political outcomes — from election results to Congressional control. But these platforms differ substantially in regulatory structure, trading limits, market breadth, and legal exposure. This article provides a factually verified comparison of both platforms as of March 2026, based on primary regulatory documents and official press releases.
Note: This article has been reviewed for factual accuracy as of March 2026. An earlier version contained inaccurate descriptions of PredictIt's regulatory status, which have been corrected throughout.
TL;DR
- Kalshi: CFTC-licensed designated contract market (DCM) since November 2020. High volume, sports-dominant. Facing active state-level legal challenges as of March 2026.
- PredictIt: Operates under an amended CFTC No-Action Letter (July 2025). Not-for-profit educational framework, U.S. political markets only. Bet cap raised to $3,500; trader limit removed.
- Key distinction: Kalshi holds a full DCM license; PredictIt operates under a No-Action Letter, a different and more limited form of regulatory accommodation. Both are legitimate, but the scope of their authorization differs materially.
Section 1: What is Kalshi?
Kalshi (KalshiEX LLC) is a New York-based prediction market platform founded in 2021. It was the first platform to receive CFTC designation as both a designated contract market (DCM) and derivatives clearing organization (DCO) for event contracts which meaning user trades are classified as futures contracts, regulated financial instruments under federal law.
Regulatory Position
In November 2020, the CFTC formally approved Kalshi as a designated contract market. The official CFTC approval order (Release 8302-20) is the primary source for Kalshi's federal regulatory standing. This DCM designation is genuine and significant. However, it is not a blanket preemption of state law — a question that is currently being litigated across multiple jurisdictions.
Key Partnerships
- Robinhood — prediction market integration
- Plus500 — broker access
- CNN — media partnership for election markets
- Coinbase — exploring joint prediction market products
Legal and Regulatory Challenges (2025–2026)
Kalshi's aggressive expansion into sports event contracts in January 2025 triggered a wave of state-level enforcement actions that continues as of this writing:
- Massachusetts (Sept 2025): AG sued Kalshi; court issued preliminary injunction barring sports contracts in-state (Jan 2026)
- Nevada (Mar 2026): Temporary restraining order barring Kalshi from offering sports, election, and entertainment contracts
- Arizona (Mar 2026): Criminal misdemeanor charges filed (20 counts); fines up to $20,000 each
- Washington state (Mar 28, 2026): Lawsuit filed days before this article's publication
- Michigan: AG filed suit under the Lawful Sports Betting Act (Mar 2026)
- Federal class action (Nov 2025): Users allege Kalshi operates as an unlicensed sportsbook and bets against its own customers through market-maker subsidiaries
In total, Kalshi faces over 20 federal lawsuits and civil enforcement actions across more than a dozen states as of late March 2026. The outcome of this litigation will define the future of the entire prediction market industry.
Section 2: What is PredictIt? (Updated)
PredictIt is a U.S.-based political prediction market originally operated on behalf of Victoria University of Wellington (New Zealand), a not-for-profit academic institution. Since July 2025, platform governance has transferred to the Prediction Market Research Consortium (PMRC), a U.S. non-profit entity advised by academic experts from Princeton, Rutgers, and Wake Forest universities. Day-to-day operations continue to be managed by Aristotle International, Inc.
Read: What is PredictIt?
Regulatory Structure: The No-Action Letter Framework
PredictIt has operated since 2014 under a CFTC No-Action Letter which is a formal statement by the CFTC that it will not pursue enforcement action against a specific entity, under specific conditions. The original letter which CFTC Letter No. 14-130, October 2014 established PredictIt's original operating framework, including a $850 per-contract investment cap and a 5,000-trader limit per market.
These constraints were materially updated in July 2025 by CFTC Letter No. 25-20, which raised the per-contract cap to $3,500 and per the letter's own language and eliminated the 5,000-trader limit entirely. The current constraints are set out in the "Current Operating Constraints" section below.
A No-Action Letter is not equivalent to a full regulatory license such as a DCM designation. It is a narrower form of regulatory accommodation, issued to a specific named beneficiary, that can be amended or withdrawn by the CFTC.
The 2022–2025 Legal Battle
In August 2022, the Biden-era CFTC withdrew PredictIt's No-Action Letter and ordered the platform to shut down by February 2023. PredictIt and its supporters challenged the action in court. In January 2023, the Fifth Circuit granted a temporary injunction allowing PredictIt to continue operating. In July 2025, the Fifth Circuit ruled (Clarke v. CFTC) that the prior CFTC chair had acted in an "arbitrary and capricious" manner in seeking to shut down the platform.
Following the court ruling, the CFTC and PredictIt reached a new agreement, documented in CFTC Letter No. 25-20 (July 14, 2025). This amended No-Action Letter transferred the beneficiary from Victoria University of Wellington to PMRC, and materially relaxed two key constraints:
- The 5,000-trader limit per market was removed entirely
- The per-contract investment cap was raised from $850 to $3,500 , aligned with the federal individual campaign contribution limit
PredictIt continues to operate as a not-for-profit educational project under this amended No-Action Letter. The platform is not a DCM-licensed exchange.
Aristotle Exchange: A Separate and Distinct Development
On September 5, 2025, Aristotle International (PredictIt's operator) separately received CFTC approval to operate as a DCM and DCO documented in Aristotle's official press release (GlobeNewswire, September 5, 2025). This approval was granted to Aristotle Exchange DCM, Inc. and Aristotle Exchange DCO, Inc. as distinct corporate entities and not to PredictIt itself.
On March 9, 2026, Underdog which is a U.S. sports gaming operator, acquired both Aristotle Exchange entities. Per Underdog's official press release (BusinessWire, March 9, 2026), PredictIt is not part of this acquisition and will continue to operate independently under its existing framework.
Section 3: Key Differences Between Kalshi and PredictIt
When comparing Kalshi and PredictIt, there are several key differences that potential users should consider:
Feature | Kalshi | PredictIt |
Regulatory Status | CFTC-designated DCM & DCO (full federal license since Nov 2020) | Operates under amended CFTC No-Action Letter (Letter 25-20, July 2025); not-for-profit educational framework under PMRC |
Bet Limit per Contract | No per-contract cap | $3,500 (raised from $850 under amended No-Action Letter, July 2025) |
Trader Limit per Market | None | Removed (previously 5,000; removed under amended No-Action Letter, July 2025) |
Market Focus | Sports (90%+ of volume), macro, crypto, politics, culture | U.S. political and public-affairs events |
30-Day Volume (Mar 2026) | ~$6.5 billion | Not publicly disclosed |
User Base | U.S. & institutional; Robinhood, CNN integrations | U.S. only; 400,000+ active users (per PredictIt, July 2025) |
Currency | USD | USD |
Fees | Maker/taker spread model | 10% on net profits; 5% withdrawal fee |
Operator | KalshiEX LLC (New York) | Aristotle International, Inc.; platform governed by PMRC non-profit |
Active Legal Challenges | 20+ federal lawsuits; state AG actions in MA, AZ, NV, WA, MI; criminal charges in AZ (Mar 2026) | Platform stable under No-Action Letter. Aristotle Exchange (separate DCM/DCO entity) sold to Underdog, March 2026 |
Section 4: The Legal Landscape for U.S. Political Betting
The regulatory environment for prediction markets is the most consequential and rapidly evolving issue in the industry. Two principal fault lines define the current landscape:
Federal vs. State Authority
The central legal question is whether CFTC designation as a designated contract market preempts state gambling laws. Kalshi argues that as a federally licensed exchange, state attorneys general have no jurisdiction over its products. States argue they retain traditional authority to regulate gambling within their borders.
As of March 2026, federal courts have split on this question. Some have granted Kalshi preliminary injunctions on preemption grounds; others have sided with states. The issue is expected to reach circuit courts and may ultimately be decided by the Supreme Court.
PredictIt's political-only market focus has drawn significantly less state-level scrutiny than Kalshi's sports contracts. The No-Action Letter framework also provides a distinct legal basis that is separate from the DCM preemption debate.
Congressional Activity
A bipartisan Senate bill has been introduced that would restrict CFTC-regulated prediction markets' ability to claim federal preemption over state gambling laws. Whether this legislation advances in 2026 is uncertain, but it represents a legislative risk factor for the industry.
What This Means for Users
- Kalshi users: Access to sports markets may vary by state depending on the outcome of ongoing court orders. Political markets face less state-level pressure but remain subject to regulatory evolution.
- PredictIt users: The platform is stable under its amended No-Action Letter. The sale of Aristotle Exchange to Underdog does not directly affect PredictIt's operations or user terms.
You may as well want to read: How to Read Prediction Market Odds and Implied Probability
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FAQ Sections
What is the main difference between Kalshi and PredictIt?
The primary difference is regulatory structure. Kalshi holds a full CFTC designation as a designated contract market (DCM) and derivatives clearing organization (DCO), with no per-contract bet cap and a wide range of markets including sports, macro, and politics. PredictIt operates under an amended CFTC No-Action Letter, a narrower regulatory accommodation, limited to U.S. political and public-affairs markets, with a $3,500 per-contract investment cap. Both are legally authorized to operate in the U.S., but under materially different frameworks.
Is Kalshi legally approved for U.S. political betting?
Kalshi holds a CFTC DCM designation that covers political event contracts. However, as of March 2026 it faces over 20 federal lawsuits and enforcement actions from multiple state attorneys general, who argue that state gambling laws apply regardless of federal designation. Courts have reached different conclusions on this question. Users should verify current platform availability in their state before trading.
How does PredictIt operate legally in the U.S.?
PredictIt operates under a CFTC No-Action Letter, a formal regulatory instrument under which the CFTC agrees not to pursue enforcement action, provided specific conditions are met. The current framework is governed by CFTC Letter No. 25-20 (July 2025), which amended the original 2014 letter with more permissive terms. This is a recognized regulatory mechanism that the CFTC has used to authorize PredictIt's operations for over a decade, most recently with an expanded investment cap of $3,500 and removal of the trader limit per market.
Which platform is better for U.S. political betting specifically?
PredictIt is the more focused option: its entire market offering is restricted to political and public-affairs events, and its community is oriented toward political forecasting and research. Kalshi offers political markets but they represent a small fraction of overall activity,sports contracts account for over 90% of Kalshi's trading volume. Users whose primary interest is political prediction may find PredictIt's specialization more relevant. Users who want political contracts alongside a broader range of markets will find more variety on Kalshi.
What is the future of political prediction markets in the U.S.?
The regulatory landscape remains active. Key developments to watch: the outcome of Kalshi's ongoing litigation with state attorneys general over whether federal DCM status preempts state gambling laws; potential Congressional legislation that could affect that preemption framework; and PredictIt's evolution under PMRC governance. Both platforms are legally operating as of March 2026, but the rules governing prediction markets in the U.S. are likely to be shaped significantly by court decisions expected later in 2026.
Conclusion
Kalshi and PredictIt represent two distinct and legitimate models for prediction market participation in 2026, each with a different regulatory foundation and user experience.
Kalshi holds the strongest federal regulatory designation but faces the most active legal pressure from state governments, particularly over sports event contracts. PredictIt operates under an amended CFTC No-Action Letter that has materially expanded its capabilities since July 2025, while retaining its not-for-profit, research-oriented identity.
As the 2026 midterm election cycle accelerates, both platforms are likely to see increased political market activity. Users are advised to review each platform's current terms directly and monitor ongoing regulatory developments before trading.
Disclaimer
This article is for informational purposes only and does not constitute financial or legal advice. Prediction market trading involves significant risk, including the possibility of losing your entire investment. Regulatory status and platform features are subject to rapid change; verify current terms directly with each platform and consult a qualified professional before trading. MEXC is not responsible for losses incurred on third-party platforms.
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