WagerMintsIs Kalshi legal? State by state
Last reviewed Nov 3, 2026
27 states
Where does Kalshi stand?
The May 5, 2026 federal injunction bars Arizona from criminal or civil enforcement over event contracts on CFTC-regulated exchanges, including the 20-count criminal case against Kalshi.
The attorney general's opinion names Kalshi as an example; no enforcement or lawsuit was found.
Two tribes' federal suit is pending, and the Ninth Circuit said on Sept. 16, 2026 the tribes are likely to win on their claim that Kalshi's sports contracts on tribal land violate federal gaming law.
Kalshi received a state cease-and-desist order in December 2025, is being sued by the state, and has an appeal pending in the Second Circuit (No. 26-2239).
As of October 27, 2026, we found no Florida state lawsuit, order or enforcement letter against Kalshi, Polymarket US or other platforms, and no court order stops trading. The Seminole Tribe, which holds the state's sports betting rights under its gaming compact, sued DraftKings over its prediction market product in October 2026; that is a tribe suing, not the state. A private class action against Crypto.com is also open in federal court.
Kalshi is covered by the October 30, 2026 preliminary injunction in its own suit against Illinois officials.
Kalshi sued first in March 2026, lost its request for a preliminary injunction, and is appealing.
The Commonwealth sued Kalshi and its partners including Coinbase in June 2026; the case was moved to federal court and no ruling stopping Kalshi was found.
Kalshi is suing the governor, the Gaming Control Board and state police to block enforcement; the case was filed October 23, 2026.
Kalshi got a state cease-and-desist letter in April 2025, lost a bid for a preliminary injunction in August 2025, and is appealing to the Fourth Circuit; Baltimore also sued it in August 2026.
Kalshi is the defendant in the state's case, now at the Supreme Judicial Court (No. SJC-13906).
A state judge in Ingham County issued a preliminary injunction on Sept. 1, 2026 requiring Kalshi to geofence Michigan for its sports contracts, with a $500,000 per day fine for violations.
Kalshi sued Attorney General Ellison on May 27, 2026 to stop the law.
Kalshi received the attorney general's September 17, 2026 letter and sued Missouri officials in federal court on October 27, 2026.
Kalshi received cease-and-desist letters in March 2025 and April 2026; its federal suit was dismissed without prejudice as to the attorney general and the gambling division.
A Nevada state judge entered a preliminary injunction on May 18, 2026 barring sports, election and entertainment contracts in Nevada, and Kalshi agreed on July 23 to a stronger geofence with a $120,000 per day penalty.
A preliminary injunction, upheld by the Third Circuit, stops New Jersey from enforcing its gambling laws against Kalshi's sports event contracts for now.
Kalshi was sued by the state (June 2026) and by the Mescalero Apache Tribe and other tribes (May 2026); no ruling was confirmed.
New York sued Kalshi on July 31, 2026, and Kalshi has a separate federal case and appeal in the Second Circuit against New York officials.
A federal judge refused to block Ohio in March 2026, the Sixth Circuit agreed on Sept. 25, 2026, and Kalshi asked for a rehearing by the full court on Oct. 9.
As of October 27, 2026, we found no lawsuit, cease-and-desist order or court case by Pennsylvania against Kalshi, Polymarket US, Robinhood, Coinbase or Crypto.com, and no federal case naming a prediction market in the state. The attorney general signed a multistate brief backing Massachusetts against Kalshi, and a bill to license and tax prediction markets sits in a House committee.
Rhode Island sued Kalshi on May 21, 2026, and Kalshi sued state officials in federal court the same week.
A federal judge protected Kalshi in February 2026; the Sixth Circuit vacated that injunction on Sept. 25, 2026 and sent the case back, and Kalshi seeks a rehearing.
As of October 27, 2026, we found no Texas lawsuit, order or letter that stops anyone from trading on Kalshi, Polymarket US, Robinhood, Coinbase or Crypto.com in the state. Texas bans most gambling, and the Lieutenant Governor has told the state Senate to study prediction markets before the legislature meets in January 2027. A Senate committee hearing on the topic was set for September 15, 2026.
Kalshi lost its federal suit on Aug. 4, 2026 and is appealing to the Tenth Circuit (No. 26-4100). Faces a state civil suit and, since Oct. 28, 2026, criminal charges against the company and its co-founders.
A King County Superior Court preliminary injunction bars Kalshi from the listed contract types in Washington, and the state Court of Appeals refused to pause it.
Kalshi was sued by the state (April 2026) and by the Ho-Chunk Nation (August 2025); no ruling stopping it found.
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 Kalshi trades taxed?
Is Kalshi legal in the US?
Kalshi'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 Kalshi.
Do I owe tax on Kalshi 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 Kalshi 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
2,044 characters
I trade prediction markets on Kalshi. I'm working on my US federal taxes for 2026. From WagerMints, checked November 3, 2026: - Kalshi's Documents page says it does not report profits and losses to the IRS. - Forms it may send: 1099-INT for interest, 1099-MISC for credits and rewards, 1099-B or 1099-DA for crypto transfers. - Its Profit and Loss statement uses first in, first out, is split by year and updates on the first morning of each month. - Reward credits only appear in the activity export, not the trades export. - 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/kalshi-taxes - https://wagermints.com/blog/how-kalshi-calculates-profit-and-loss - 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.