Is Polymarket Legal? Complete Legal Guide 2025

Polymarket operates in a complex legal landscape that varies significantly by jurisdiction. While it's a legitimate prediction market platform backed by major investors, understanding its legal status is crucial before trading. This comprehensive guide covers Polymarket's legality across 50+ countries, the CFTC settlement, regulatory frameworks, tax implications, and what traders need to know to stay compliant.

Quick Answer: Is Polymarket Legal?

Yes, Polymarket is legal - but with important geographical restrictions. The platform is legally operating and accessible in most countries worldwide, with the notable exception of the United States, where it was blocked following a 2022 settlement with the Commodity Futures Trading Commission (CFTC).

The platform functions as a decentralized prediction market built on the Polygon blockchain, allowing users to trade on the outcomes of real-world events. Unlike traditional gambling platforms, Polymarket positions itself as an information market that aggregates collective intelligence to forecast future events. To understand how the platform works, see our guide on what is Polymarket.

For traders wondering about legitimacy: Polymarket is a well-funded, venture-backed company that has raised over $74 million from prominent investors including Polychain Capital, General Catalyst, and Founders Fund. Peter Thiel's Founders Fund participated in Polymarket's $45 million Series B round in 2024, providing significant institutional validation.

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The CFTC Settlement Explained

In January 2022, Polymarket reached a landmark settlement with the Commodity Futures Trading Commission that fundamentally changed its operations in the United States. Understanding this settlement is crucial for grasping Polymarket's current legal position.

What Happened

The CFTC investigated Polymarket's operations and determined that the platform had been operating an unregistered facility for event-based binary options trading, which violated the Commodity Exchange Act (CEA) and CFTC regulations. Binary options on events (like election outcomes or sports results) are classified as derivatives contracts under US law.

Why This Matters for Legitimacy

The settlement actually enhances Polymarket's legitimacy in several ways:

• Regulatory engagement - Rather than operating in the shadows, Polymarket worked with regulators to reach a compliant solution
• No criminal charges - The settlement was civil, not criminal, and involved no admission of wrongdoing
• Clear legal status - The settlement provides regulatory clarity for international operations
• Continued funding - Major investors continued backing Polymarket post-settlement, including a $45M Series B in 2024

The $1.4 million penalty was relatively modest for a well-funded startup, suggesting the CFTC viewed this as a regulatory compliance issue rather than fraud or market manipulation. Compare this to the billions in fines levied against major financial institutions for more serious violations.

Legal Status in the United States

Why US Traders Are Blocked

US traders face restrictions because prediction markets that involve real money fall under securities or commodities regulations. The CFTC classifies event-based prediction markets as derivatives contracts, requiring extensive licensing and compliance frameworks that Polymarket chose not to pursue.

To legally offer prediction markets to US customers, a platform must either:

• Register as a Designated Contract Market (DCM) with the CFTC
• Operate as a Swap Execution Facility (SEF)
• Obtain specific exemptions for certain market types
• Limit markets to certain categories (like economic indicators)

The registration process is expensive, time-consuming, and limits what markets can be offered. Rather than navigate this complex regulatory environment, Polymarket opted to focus on international markets where prediction market regulations are more permissive.

Enforcement Mechanisms

Polymarket implements multiple layers of geo-blocking to comply with the CFTC settlement:

• IP address blocking - US IP addresses are blocked from accessing the platform
• KYC verification - ID verification rejects US-issued documents
• Payment restrictions - US bank accounts and cards cannot fund accounts
• VPN detection - Some VPN services are detected and blocked

If you're based in the United States, attempting to circumvent these restrictions violates Polymarket's terms of service and could have legal consequences. Instead, check out our comprehensive Polymarket USA guide for legal trading options, or explore Polymarket alternatives like Kalshi or PredictIt.

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International Legal Framework

Polymarket's legal status internationally depends on how each jurisdiction classifies prediction markets. Generally, countries take one of four approaches:

The key distinction is whether regulators view prediction markets as skill-based information aggregation (like stock trading) or chance-based wagering (like casino games). This classification determines which regulations apply.

Country-by-Country Legal Status

Here's a comprehensive breakdown of Polymarket's legal status in major markets worldwide:

North America

Europe

Asia-Pacific

Middle East & Africa

Latin America

European Union Regulations

The European Union generally takes a permissive approach to prediction markets, viewing them as information aggregation tools rather than gambling. Several factors contribute to this favorable regulatory environment:

MiCA Regulation Impact

The Markets in Crypto-Assets (MiCA) regulation, which became fully effective in 2024, provides regulatory clarity for crypto platforms operating in the EU. While MiCA primarily focuses on crypto assets and their issuers, it creates a framework that benefits platforms like Polymarket that use stablecoins (USDC) for transactions.

• Stablecoin clarity - USDC is regulated under MiCA, providing legal certainty for Polymarket's primary currency
• No prediction market classification - MiCA does not specifically regulate prediction markets
• Passporting - Once licensed in one EU country, platforms can operate across the bloc

Why EU Countries Are Favorable

European regulators generally distinguish between:

• Gambling - Games of pure chance with no skill element
• Betting - Wagering on uncertain outcomes (sports, elections)
• Information markets - Platforms that aggregate collective intelligence

Prediction markets like Polymarket fall into the third category because they reward research, analysis, and information gathering rather than pure luck. This distinction keeps them outside traditional gambling regulations in most EU jurisdictions.

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United Kingdom Regulations

The UK occupies a unique position post-Brexit, with its own regulatory framework separate from the EU. Polymarket is currently accessible and legal in the UK, though users should understand the regulatory landscape:

FCA Position

The Financial Conduct Authority (FCA) regulates financial services in the UK. Prediction markets are not currently regulated as financial instruments by the FCA, meaning:

• Polymarket is not FCA-regulated
• Users don't have FCA protections (like FSCS deposit insurance)
• Trading is permitted but at your own risk

Gambling Commission Position

The UK Gambling Commission regulates gambling activities. Prediction markets have historically been treated differently from traditional gambling because:

• They require skill and analysis, not just luck
• They serve information aggregation purposes
• Academic research supports their social utility

However, UK regulation could change. The government has shown interest in regulating crypto more comprehensively, which could eventually affect platforms like Polymarket.

Asia-Pacific Regulations

Asia-Pacific presents a mixed regulatory landscape for prediction markets:

Favorable Jurisdictions

Singapore and Hong Kong are particularly favorable for crypto and prediction market activities:

• Singapore - The MAS (Monetary Authority of Singapore) has created clear frameworks for digital assets without specifically restricting prediction markets
• Hong Kong - Operating under different rules than mainland China, Hong Kong maintains a crypto-friendly environment
• Australia - ASIC has not regulated prediction markets, making them effectively legal

Restricted Jurisdictions

China maintains strict prohibitions on cryptocurrency trading, which effectively blocks Polymarket access since the platform requires USDC. The ban extends to:

• Crypto exchanges
• Crypto trading activities
• Crypto mining
• By extension, crypto-based prediction markets

Prediction Markets vs Gambling: Legal Distinctions

A critical legal distinction separates prediction markets like Polymarket from traditional gambling. Understanding this difference is essential for grasping Polymarket's legal position worldwide.

Key Differences

Academic Research Support

Decades of academic research support prediction markets' unique value proposition:

• Iowa Electronic Markets - Academic prediction market that has outperformed polls in 74% of elections since 1988
• Corporate prediction markets - Used by Google, HP, and others for internal forecasting
• COVID-19 forecasting - Prediction markets provided accurate pandemic projections

This research has influenced regulators to treat prediction markets differently from gambling. Successful traders use analytics tools and API access for data-driven decision making, further distinguishing the skill element.

How Polymarket Operates Legally

Corporate Structure

Polymarket operates as a Delaware-incorporated company with international operations. The company structure includes:

• Blockratize Inc. - The legal entity behind Polymarket
• International subsidiaries - For operations in various jurisdictions
• Third-party service providers - For KYC, payment processing, etc.

Decentralized Infrastructure

Polymarket operates on the Polygon blockchain, a layer-2 scaling solution for Ethereum. This decentralized architecture is central to its legal positioning:

• Smart contract execution - Trades execute automatically without centralized intervention
• Transparent operations - All transactions are publicly verifiable on-chain
• Non-custodial (mostly) - Users control their own funds via connected wallets

Learn more about the platform's technical foundation in our how to use Polymarket guide.

USDC as Primary Currency

The platform uses USDC (USD Coin), a regulated stablecoin pegged to the US dollar, as its primary trading currency. This choice provides:

• Price stability - 1 USDC always equals approximately $1
• Regulatory clarity - USDC is issued by Circle, a regulated financial institution
• Easy on/off ramps - USDC can be easily converted to fiat currency

For details on funding your account, see our USDC deposit guide and deposit and withdrawal guide.

Market Resolution via UMA Protocol

Polymarket employs UMA Protocol, a decentralized oracle system, to resolve market outcomes. This system:

• Uses an Optimistic Oracle that proposes outcomes
• Allows disputes within a specific timeframe
• Reduces Polymarket's role as a centralized authority
• Provides transparent, verifiable resolution

Learn more about how Polymarket resolves disputes using UMA.

KYC and Compliance Requirements

Polymarket implements know-your-customer (KYC) requirements to comply with international anti-money laundering regulations. The verification process determines your trading limits:

What KYC Requires

Full KYC verification (Level 2) typically requires:

• Full legal name
• Date of birth
• Residential address
• Government-issued photo ID (passport, driver's license, national ID)
• Selfie for identity verification
• Proof of address (utility bill, bank statement) in some cases

AML Compliance

Beyond KYC, Polymarket implements anti-money laundering (AML) measures:

• Transaction monitoring for suspicious activity
• Sanctions screening against OFAC and other lists
• Large transaction reporting
• Suspicious activity reporting (SARs)

Tax Implications by Country

Prediction market profits are generally taxable, though treatment varies by jurisdiction. Always consult a tax professional for your specific situation.

Record Keeping Requirements

Regardless of your jurisdiction, maintain detailed records:

• All trade confirmations
• Deposit and withdrawal history
• USDC/USD conversion rates at time of trades
• Cost basis for each position
• Profit/loss calculations

PolyTrack's portfolio tracking can help you maintain these records for tax purposes.

Legal Alternatives for US Traders

If you're based in the United States, several legal alternatives exist for prediction market trading:

Kalshi

Kalshi is the only CFTC-regulated prediction market exchange in the US. Key features:

• CFTC designation as a Designated Contract Market (DCM)
• Available to US residents in most states
• Limited market selection compared to Polymarket
• No crypto required (USD deposits via bank transfer)
• Election markets now available after 2024 court ruling

See our detailed Polymarket vs Kalshi comparison.

PredictIt

PredictIt operates under a CFTC no-action letter for academic research purposes:

• Run by Victoria University of Wellington
• $850 maximum position per market
• Limited to political markets
• 10% fee on profits
• Future uncertain (CFTC withdrew no-action letter in 2022, litigation ongoing)

See our detailed Polymarket vs PredictIt comparison.

Comparison Table

For more options, see our comprehensive guide to Polymarket alternatives.

Future Regulatory Outlook

Evolving Prediction Market Regulations

The regulatory landscape for prediction markets continues to evolve. Key trends to watch:

• US regulatory clarification - Kalshi's 2024 court victory on election markets signals potential regulatory thaw
• EU harmonization - MiCA may lead to clearer prediction market rules
• Increased legitimacy - Academic research and accurate forecasting strengthen the case for light regulation
• Institutional adoption - Growing interest from institutions could drive regulatory frameworks

Potential Return to US Markets

While Polymarket currently blocks US users, several scenarios could change this:

• CFTC licensing - Polymarket could pursue DCM registration like Kalshi
• Regulatory reform - Congress could create new frameworks for prediction markets
• Court decisions - Legal precedents could favor prediction market operators
• State-by-state approach - Some states might explicitly legalize prediction markets

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Frequently Asked Questions