Is Polymarket Legal? Complete Legal Guide 2025

Polymarket operates in a complex legal landscape that varies significantly by jurisdiction. While it's a legitimate prediction market platform, understanding its legal status is crucial before trading. Here's everything you need to know about Polymarket's legality, regulatory challenges, and how it operates within global financial frameworks.

Is Polymarket Legal? The Short Answer

Polymarket is a legally operating prediction market platform, but with important geographical restrictions. The platform is blocked for users in the United States following a 2022 settlement with the Commodity Futures Trading Commission (CFTC). For international users outside the US, Polymarket operates legally and is accessible in most countries worldwide.

The platform functions as a decentralized prediction market built on the Polygon blockchain, allowing users to trade on the outcomes of real-world events. Unlike traditional gambling platforms, Polymarket positions itself as an information market that aggregates collective intelligence to forecast future events.

For traders wondering about legitimacy: Polymarket is a well-funded, venture-backed company that has raised over $74 million from prominent investors including Polychain Capital, General Catalyst, and Founders Fund. The platform operates transparently with clear terms of service and implements know-your-customer (KYC) procedures.

Polymarket's Legal Status in the United States

The CFTC Settlement and US Ban

In January 2022, Polymarket reached a settlement with the CFTC that fundamentally changed its operations in the United States. The commission determined that Polymarket had operated an unregistered facility for event-based binary options trading, violating the Commodity Exchange Act and CFTC regulations.

As part of the settlement, Polymarket agreed to pay a $1.4 million civil monetary penalty and implement geo-blocking technology to prevent US-based users from accessing the platform. This wasn't an admission of wrongdoing but rather a regulatory compliance measure.

The CFTC's primary concern was that Polymarket markets constituted event contracts—derivatives tied to specific event occurrences—which fall under CFTC jurisdiction. Without proper registration as a designated contract market or derivatives clearing organization, the platform couldn't legally offer these products to US customers.

Why US Traders Are Blocked

US traders face restrictions because prediction markets that involve real money fall under securities or commodities regulations. The CFTC classifies event-based prediction markets as derivatives contracts, requiring extensive licensing and compliance frameworks.

Rather than navigate this complex regulatory environment, Polymarket opted to focus on international markets where prediction market regulations are more permissive. If you're based in the United States, check out our comprehensive Polymarket USA guide for legal trading options.

International Legal Framework

Where Polymarket Operates Legally

Polymarket is fully operational and legally accessible in most countries outside the United States. Key markets include the United Kingdom (with certain restrictions), most European Union countries, Canada, Australia, Singapore, and numerous emerging markets across Asia and Latin America.

In the European Union, prediction markets generally fall outside traditional gambling regulations because they're viewed as skill-based information markets rather than games of chance. This regulatory treatment allows Polymarket to operate more freely.

Regulatory Compliance Measures

Polymarket implements several compliance measures to operate legally across international markets:

• Identity verification through KYC processes for all users
• Transaction monitoring systems to detect suspicious activity
• Deposit and withdrawal limits based on verification levels
• Geo-blocking technology to enforce geographical restrictions

How Polymarket Operates: Technical and Legal Structure

Decentralized Infrastructure

Polymarket operates on the Polygon blockchain, a layer-2 scaling solution for Ethereum that provides fast, low-cost transactions. This decentralized architecture is central to its legal positioning—by leveraging blockchain technology and smart contracts, the platform operates with less centralized control than traditional betting platforms.

The platform uses USDC (USD Coin), a regulated stablecoin pegged to the US dollar, as its primary trading currency. This choice provides price stability and regulatory clarity since USDC is issued by regulated financial institutions.

Market Resolution and Dispute Mechanisms

Polymarket employs UMA Protocol, a decentralized oracle system, to resolve market outcomes. When an event concludes, UMA's Optimistic Oracle proposes an outcome that becomes final unless disputed within a specific timeframe. This decentralized resolution mechanism reduces the platform's role as a centralized authority.

Polymarket vs. Gambling: Legal Distinctions

Information Markets vs. Games of Chance

A critical legal distinction separates prediction markets like Polymarket from traditional gambling: prediction markets are designed to aggregate information and forecast future events, while gambling is primarily entertainment focused on games of chance.

Gambling regulations typically target activities where outcomes are random or based purely on chance with no informational value. Polymarket markets, by contrast, reward research, analysis, and information gathering—skills that differentiate prediction markets from casino games or sports betting.

Skill-Based Trading vs. Pure Chance

Polymarket markets require analysis and decision-making based on available information, making them more analogous to securities trading than to slot machines or roulette. Top traders consistently outperform by developing expertise in specific domains and conducting research.

KYC Requirements and User Verification

Identity Verification Process

Polymarket implements know-your-customer (KYC) requirements to comply with international anti-money laundering regulations. New users can start trading with basic account registration, but must complete identity verification to unlock higher deposit limits.

The KYC process typically requires:

• Full legal name and date of birth
• Residential address
• Government-issued photo ID
• Selfie for identity verification

Future Regulatory Outlook

Evolving Prediction Market Regulations

The regulatory landscape for prediction markets continues to evolve as regulators worldwide grapple with how to classify and oversee these platforms. Some jurisdictions are developing specific frameworks that recognize their unique characteristics and social utility.

Potential Return to US Markets

While Polymarket currently blocks US users, the platform could potentially re-enter the American market if regulatory conditions change or if it obtains proper licensing. For now, US-based traders must explore alternative platforms that operate with proper domestic licensing.

Final Thoughts: Trading Legally and Safely

Polymarket operates legally for international users outside the United States, maintaining compliance with applicable regulations through KYC procedures, transaction monitoring, and geographical restrictions.

For traders considering Polymarket, the key takeaway is: if you're outside the United States and comply with your local regulations, Polymarket is a legitimate platform backed by reputable investors with transparent operations.

However, users should always verify their local regulations and understand that legal treatment of prediction markets varies by jurisdiction. Responsible trading includes ensuring your participation complies with applicable laws in your location.