WagerMintsIs Polymarket legal? State by state
Last reviewed Nov 3, 2026
13 states
Where does Polymarket stand?
Polymarket received a state cease-and-desist order in September 2026.
The Commonwealth sued Polymarket and its affiliates in June 2026; the case is in federal court in Frankfort.
Polymarket US was sued by the city of Baltimore in August 2026; no state action found.
Polymarket US's federal suit against the attorney general (filed February 2026) was closed in March 2026; we did not find the outcome.
A federal judge denied Polymarket US's injunction request on June 17, 2026; its Sixth Circuit appeal is on hold behind the Kalshi appeals.
QCX LLC sued Attorney General Ellison on June 3, 2026.
Polymarket received a cease-and-desist letter; no lawsuit was found.
A Nevada state judge granted the gaming regulator a preliminary injunction against Polymarket US (QCX LLC) on May 29, 2026.
Polymarket US's operator QCX sued Attorney General Torrez in federal court on June 30, 2026; no ruling was found.
The attorney general sued Polymarket US on September 24, 2026, and Polymarket US filed its own federal suit against her the same day.
QCX LLC, which operates Polymarket US, sued Ohio officials in federal court in Columbus on Oct. 16, 2026; no ruling yet.
Rhode Island sued Polymarket alongside Kalshi on May 21, 2026.
Polymarket US was sued by the state in April 2026; the case is in federal court in Madison.
Federal courts
What have the federal courts said?
States say prediction market sports contracts are bets that their gambling laws cover, while Kalshi and the CFTC say they are swaps, a kind of derivative that only the federal Commodity Exchange Act and the CFTC regulate. The Third Circuit appeals court sided with Kalshi against New Jersey in April 2026, while the Ninth Circuit (Nevada, August 2026) and the Sixth Circuit (Ohio and Tennessee, September 2026) ruled for the states, all at the preliminary stage. The Fourth Circuit (Maryland) heard argument in May 2026 and had not ruled as of November 3. New Jersey's petition to the Supreme Court, Flaherty v. KalshiEX (No. 26-299), is waiting on Kalshi's response due December 7, 2026, and the Court has not yet said whether it will hear the case. On October 9, 2026 the CFTC proposed a rule defining event contracts as swaps.
Your taxes
How are Polymarket trades taxed?
Is Polymarket legal in the US?
Polymarket's position differs by state, and courts have split on whether states can apply gambling laws to these contracts. The states below have an order, lawsuit, letter or law on record that names Polymarket.
Do I owe tax on Polymarket profit if my state is fighting it?
Yes. Federal tax still applies, and IRS Publication 525 says income from illegal activities must be reported too. A state's legal fight doesn't remove tax on profit you already made.
Ask your AI
Ask your AI about your Polymarket US year
Answer a few questions and we write the prompt for ChatGPT, Claude, Perplexity or any AI. It carries the four tax methods, your state’s rule and links to the pages behind them, checked November 3, 2026. Or run your actual trades for exact figures, free.
Add rough numbers (optional)
The AI can then work the methods out for your year. Round figures are enough.
Your prompt
1,771 characters
I trade prediction markets on Polymarket US. I'm working on my US federal taxes for 2026. From WagerMints, checked November 3, 2026: - Polymarket US is a separate, CFTC-regulated exchange from polymarket.com. - We haven't been able to confirm what Polymarket US reports to the IRS, so check the account's documents. - The IRS has published no guidance on how event contracts are taxed. Four ways traders report this: 1. Capital gains: Form 8949 and Schedule D, short- or long-term by holding period. Net losses offset up to $3,000 of other income a year, and the rest carries forward. 2. Section 1256: Form 6781, 60% long-term and 40% short-term however long I held. Positions open on December 31 count as sold at that day's value. Disputed: Camuso and Mukherjee (Tax Notes Federal, June 2026) conclude it isn't available, White & Case argues for it, and the CFTC's October 2026 proposal to call event contracts swaps cuts against it, because Section 1256 excludes swaps. 3. Ordinary income: net result on Schedule 1, line 8z. 4. Gambling: winnings on Schedule 1, line 8b. Losses only on Schedule A if I itemize, only up to winnings, and only 90% of them from 2026. Read these pages: - https://wagermints.com/polymarket-taxes - https://wagermints.com/blog/how-to-report-kalshi-polymarket-taxes My question: How would my year come out under each of the four methods? How to answer: - Say which links you opened, and never describe one you didn't open. If one fails, use the facts above and say so. - Mark each point [linked source], [general tax rule] or [unsettled]. - Put the methods side by side in one table for my year, and state any number you assume. - Don't pick a method for me. End with questions for a CPA or enrolled agent, then anything you need from me.
WagerMints doesn’t see or store what you type here. The prompt goes to the AI you pick, under that company’s terms. Never add your Social Security number, API keys or wallet keys. AI answers can be wrong, so check them against the linked sources and a preparer.