Polymarket is back in the U.S.—what to know about prediction markets
Shoppers in New York City lined up in Greenwich Village on Thursday for the grand opening of The Polymarket, a free grocery store. Market — perhaps a reference to the city-run grocery stores proposed by New York City Mayor Zohran Mamdani -On Sunday it only works until 7pm.
But the eponymous sponsor, a prediction market that allows users to trade binary “yes” or “no” contracts based on the outcomes of real-world events from Super Bowl coin tosses to Federal Reserve interest rate cuts, appears to be here to stay.
That didn’t always seem to be the case. In 2022, the Commodity Futures Trading Commission fined Polymarket $1.4 million for operating as an unregistered derivatives market and forced the firm to block US users.
The company continued its offshore operations and in July 2025 Spent $112 million to buy QCEXis the holding company of a regulated and licensed options trading platform. The move paved the way for US federal regulatory approval, which the firm received in November. The company has relaunched the beta version of its app in the US, and it is slowly rolling out to users who sign up for the waitlist. Polymarket does not disclose how many users it currently has.
Polymarket and rival prediction marketplace Kalshi are currently embroiled in legal battles at the state level. Nevada, New York and New Jersey They say sports-related commercial activity contracts amount to gambling that falls under government jurisdiction and is taxed differently than financial markets.
State regulators in Massachusetts recently won an injunction in court against Kalshi, temporarily banning the firm from offering sports-related contracts in the state.
In response to the lawsuit, a spokesperson for Kalshi told CNBC: “Massachusetts seeks to stifle Kalshi’s innovations by relying on outdated laws and ideas.” The company said it was “ready to defend” [its technology] Once again in court.”
This week Polymarket filed a lawsuit against the state. What company representatives said Polymarket hopes to avoid “imminent and irreparable harm that would result from Massachusetts’ enforcement of state gambling laws against federally regulated derivative exchanges.”
Meanwhile, customer money continues to flow. Kalshi’s CEO estimates the firm traded more than $1 billion during the Super Bowl. This includes a $100 million trade in which song Bad Bunny will be the first to perform alone in the first half.
The mechanics of prediction markets
So how does all this work? Prediction markets operate on event contracts, which are essentially financial instruments that allow you to buy a share of the outcome of an event. The price of these shares ranges from $0 to $1, and the value reflects the probability of your chosen outcome occurring.
Prior to the Super Bowl, contracts predicting the Seattle Seahawks would win at both Polymarket and Kalshi cost $0.68. According to BarronThis implies a 68% chance of a Seattle victory according to markets. At the final whistle, all contracts at any price in Seattle rose to $1 per share. All New England Patriots contracts went to $0.
Unlike a traditional casino, those who purchase event contracts are not playing against the “house.” Instead, platforms like Polymarket and Kalshi allow investors to buy and sell contracts among themselves, and the companies charge a small fee on each transaction. The more money accumulated on the “yes” or “no” side of a particular event, the more expensive the contract.
For example, stocks predicting a Seahawks victory in the Super Bowl rose closer to $1 as it became clear that Seattle would win.
More importantly, investors can buy and sell their options at any time before the event ends. Let’s say you win the election with $0.05 by saying “yes” to a fringe political candidate. Then, a month later, the candidate gave a landmark speech that increased his popularity. Once your candidate receives more money, the price is now $0.10. If you think your shares could rise (or actually gain), you can keep your shares or sell them for twice what you paid for them.
Essentially, these markets provide real-time odds on future events based on a crowdsourced pool of people with skin in the game.
On some level, this has always been the case, says Stephane Ouellette, co-founder and CEO of digital asset investment bank FRNT Financial. For example, he says, some who understand the complexities of oil futures can predict whether political tensions in the Middle East will boil over.
“There’s been a big innovation where we’ve turned these markets into more digestible information that retail traders can now understand,” Ouellette says. “Whereas before you needed a PhD in market analysis to understand this.”
Tread carefully by putting money behind your predictions, experts say
Whether buying contracts in prediction markets constitutes gambling, similar to betting on sports betting sites, is open to legal debate. But that distinction is controversial when it comes to investing and managing your money, says Ivory Johnson, certified financial planner and founder of Delancey Wealth Management.
“It’s an old adage; you have to know how much you’re willing to lose,” he says. “It’s no different than going to Vegas with your friends.”
Of course, no matter how convinced you feel about the future outcomes of a particular event, you shouldn’t make prediction contracts a key part of your investment strategy, financial professionals say.
At most, they belong in an “opportunity portfolio,” says Doug Boneparth, CFP and founder of Bone Fide Wealth. This arm of your portfolio, which may account for 5% to 10% of your investable assets, is devoted to riskier plays such as individual stocks. Boneparth says there are cryptocurrencies, niche exchange-traded funds, and maybe a guess or two.
The rest, he says, usually belongs to a well-rounded portfolio of investments that you plan to buy and hold for the long term. The idea is that even if your estimates drop to zero, the loss won’t be enough to derail your financial plans.
“Many retail investors need to approach investing as a long-term game of consistency and discipline. That way you quietly compound your returns over time,” says Boneparth. “So by the way [prediction markets] “He could be a piece of the puzzle, and I think that’s a bit of an exaggeration, he’ll definitely move into more speculative opportunities.”
Johnson recommends thinking of prediction markets as part of your entertainment budget, the same way you consider how much you spend each month on a hobby like golf. This way, you’re doing it for fun, and whether or not you make a profit from your predictions is incidental, he says.
“If I make money, great,” he says. “But when you start thinking, ‘I’m going to do this because I’m smarter than everyone else and I’m going to pay my mortgage with it,’ that’s when you have a problem.”
Disclosure: CNBC and Kalshi have a business relationship that includes a minority investment.
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