Kalshi and Polymarket are the two largest prediction market platforms, but they differ fundamentally in regulation, currency, and target users. Kalshi is CFTC-regulated for US traders using USD. Polymarket is offshore, crypto-based, and technically blocks US users.
Key Differences at a Glance
| Feature | Kalshi | Polymarket |
|---|---|---|
| Regulation | CFTC (US federal) | None (decentralized) |
| Currency | USD | USDC (crypto stablecoin) |
| US users | Legal and allowed | Technically blocked |
| Liquidity | Lower on most markets | Higher on major events |
| Fees | Built into spread | 2% on profits (some markets) |
| Tax reporting | 1099 forms provided | None (user responsible) |
| Deposit method | ACH bank transfer | Crypto wallet |
Regulation and Legal Status
Kalshi: CFTC-Regulated
- Federal approval: Designated Contract Market status from CFTC
- Legal for US users: Fully compliant in 47+ states
- Consumer protections: Segregated funds, regulatory oversight, legal recourse
- Tax compliance: Automatic 1099 reporting to IRS
Polymarket: Offshore and Decentralized
- No US regulation: Operates on Polygon blockchain without federal oversight
- Blocks US users: Terms of service prohibit US access (enforcement via VPN detection)
- Limited recourse: No regulatory protections if issues arise
- Manual tax tracking: Users must self-report all activity
Winner for US users: Kalshi. It's the only legal option with regulatory protection.
Bottom Line
For US users, Kalshi is the clear choice for legal, regulated prediction market trading. It's simpler, safer, and fully compliant.
Polymarket offers better liquidity and more market variety but carries legal and regulatory risk for US traders. If you're outside the US or comfortable navigating crypto and legal gray areas, it's a powerful platform.
Many serious traders use both and look for arbitrage opportunities between them.