Polymarket became one of the most recognizable prediction platforms after its launch in 2020. It suspended access for U.S. users in 2022 following federal charges, only to return in late 2025 under a restructured model approved by the Commodity Futures Trading Commission (CFTC). While the federal pathway opened the door for nationwide access, the comeback has triggered new legal and regulatory friction at both state and international levels.
Federal Approval Enables Polymarket’s Return
The platform’s U.S. relaunch followed a prolonged period operating outside the country. In 2022, the CFTC charged the firm with offering unregistered event-based contracts and violating cryptocurrency rules, ultimately leading to a settlement with a $1.4m fine, U.S. access restrictions, and internal restructuring. During that time, Polymarket grew abroad and saw trading spikes during the Trump vs. Harris election cycle, with major media outlets citing its pricing despite its absence in its home market.
The turning point came with Polymarket’s $112 million acquisition of QCEX, giving it access to QCX LLC and QC Clearing LLC. The transaction provided entry to CFTC licensing infrastructure, enabling operation as a Designated Contract Market. A CFTC “no-action” letter to QCX in September 2025 allowed the company to reintroduce services in the U.S. under a compliant model, with a staged rollout starting in December 2025 via waitlist access.
Under this new structure, U.S. customers no longer connect directly via cryptocurrency wallets. Instead, they must sign up through the U.S. portal, complete KYC verification, and fund accounts via regulated brokers before trading event contracts. Sports-related contracts may face added restrictions depending on state rules. The platform warns users not to bypass access via VPNs, noting intensified geoblocking and potential account freezes connected to its regulatory obligations.
State-Level Legal Tensions Persist Despite Federal Green Light
Even with federal clearance, state authorities continue to contest prediction markets. Regulators in Tennessee, Nevada, Massachusetts, Maryland, New Jersey, New York, and Connecticut have either issued enforcement actions, raised concerns, or initiated proceedings related to sports- or event-based contracts. Tennessee’s Sports Wagering Council issued cease-and-desist directives aimed at blocking Polymarket, alleging violations of gaming law, tax rules, age controls, and responsible gambling requirements. A federal judge temporarily blocked enforcement while litigation proceeds.
Nevada regulators likewise initiated a lawsuit to halt sports-event contract offerings in the state. Massachusetts courts issued a preliminary injunction in early 2026 targeting Kalshi over sports contracts, signaling growing judicial scrutiny toward financial-prediction platforms. While the ruling did not directly restrict Polymarket, it added to the industry’s legal uncertainty. These disputes reflect differing interpretations of whether event contracts resemble financial derivatives or unlicensed betting products.
International Regulatory Pressure Adds Another Layer
Legal friction extends beyond the U.S. In January 2026, regulators in Portugal and Hungary implemented bans on Polymarket. Portuguese authorities cited a lack of authorization and rules prohibiting political event wagering. Hungary’s suspension remains temporary but reflects a broader tightening trend. France introduced a “view only” mode preventing participation while still allowing market observation.
Similar concerns are emerging elsewhere, with regulatory bodies questioning the classification of prediction platforms. As one report noted, monthly volumes on leading platforms exceeded $13.5 billion with more than 43 million transactions in late 2025, prompting regulators to examine whether these markets function as financial exchanges or disguised gambling operations.
The debate intensified following a high-profile trade in early January in which a Polymarket user earned more than $436,000 after accurately predicting the removal of Venezuela’s Nicolás Maduro shortly before U.S. forces intervened. The timing led to accusations of insider access. The event drew attention in Washington and contributed to the introduction of legislation restricting official participation. As reported, the bill seeks to bar federal employees from using prediction markets if they have relevant insider knowledge. In parallel, Polymarket’s U.S. compliance operation has increased monitoring for trading tied to non-public information, with flagged accounts facing possible freezes.
At the federal level in the U.S., attitudes toward prediction platforms appear to be softening. The approval of Polymarket’s relaunch coincided with more favorable sentiment toward cryptocurrency-related initiatives. However, the contrast with state-level resistance leaves the platform operating under conflicting regulatory expectations. Internationally, bans and restrictions continue to mount, challenging the long-term accessibility of prediction markets across multiple jurisdictions.
Source:
Is Polymarket Legal in the U.S. in 2026?, gamblinginsider.com, January 26, 2026.
