On this page
Key takeaways
- Phantom, a popular self-custody crypto wallet, began rolling out prediction markets to US users on October 23, 2026. The trades run through Kalshi, a CFTC-registered exchange, and you need a verified Kalshi account to use them.
- Prediction markets sell yes-or-no contracts on real events. A contract usually pays $1 if you're right and nothing if you're wrong. The CFTC, the federal regulator for futures and derivatives, oversees the US exchanges, but several states say these contracts are illegal gambling and are fighting that in court.
- Polymarket, one of the biggest crypto-based prediction markets, fired its chief marketing officer, according to a New York Post report citing unnamed sources. Polymarket declined to comment. The Post says a related CFTC investigation is ongoing and that no wrongdoing has been established; the CFTC doesn't publicly confirm investigations.
Prediction markets, where you put money on whether something will happen, have moved from niche sites into mainstream US apps. On October 23, the crypto wallet Phantom began offering them to US users through Kalshi, and Robinhood reported record event-contract volumes in its second quarter. At the same time, the biggest crypto-native market, Polymarket, is under scrutiny over its marketing. Here's what is confirmed, what is only reported, and what a beginner should understand before trying one.
What happened
In an October 23 post, Phantom's general counsel Kevin Jacobs wrote that the wallet "is beginning to roll out prediction markets to users in the United States," with access expanding over the following weeks. It is Phantom's first US integration, and it runs through Kalshi. Phantom says Kalshi, a CFTC-registered exchange, "approves and holds users' trading accounts, and executes the trades they submit using Phantom." Kalshi's vice president of business development, Max Crowley, is quoted in the same post welcoming the launch, so both companies have confirmed it.
The legal groundwork came earlier. In March, Staff Letter 26-09 from the CFTC's staff gave Phantom no-action relief: it can connect users to regulated markets without registering as an introducing broker (a firm that brings customers to an exchange), as long as it meets certain conditions. In September the CFTC extended similar relief to other software providers in the same position.
How it works in Phantom
- Identity check first. Before your first trade you create or link a Kalshi account and pass Kalshi's identity verification inside the Phantom app.
- Paying. According to Phantom's help center, you can pay from your Phantom Cash balance or with any token on Solana. Your money moves to Kalshi to buy the contracts, and any money from a sale or a win returns to your Cash balance through Stripe.
- Fees. Phantom lists a prediction fee of $0.02 per contract: $0.01 for Phantom plus Kalshi's own $0.01 exchange fee. A variable network fee covers moving your funds to Kalshi.
- Selling early isn't guaranteed. Phantom warns that a shortage of buyers could leave you stuck, unable to get your price or to sell at all, "even when your position shows a profit."
- Not every state gets every market. The Block reported that Phantom is blocking sports markets in Michigan and wider categories in Nevada and Washington while court cases play out.
What a prediction market is, in plain words
A prediction market sells event contracts: simple yes-or-no questions such as "Will it rain tomorrow?" The CFTC's own explainer uses that example. A contract usually pays a fixed $1 if your answer is right. The price, say 70 cents for "yes", reflects what traders collectively think the odds are. Buy "yes" at 70 cents and it rains, and you make 30 cents before fees. If it doesn't rain, you lose your 70 cents.
The CFTC says prediction markets have existed in the US since 1988 and have been regulated by the agency since 2004. It says event contracts are typically structured as swaps, a type of derivative, which is why the CFTC is the federal regulator here, not the SEC.
Robinhood: demand is real
Robinhood isn't new to this. In its second-quarter 2026 results, it reported event contracts revenue of $156 million, "up over 10x" from a year earlier. Its chief financial officer, Shiv Verma, said the quarter set "new highs across equity, option, and event contract volumes." In June the company launched Rothera, an exchange and clearinghouse licensed by the CFTC and independently managed through a joint venture with Susquehanna International Group.
Polymarket: what's reported, not confirmed
On October 22 the New York Post reported, citing unnamed sources, that Polymarket fired its chief marketing officer, Matthew Modabber, after an internal review. According to the Post, the review followed a series of incidents, including a June Wall Street Journal report that his team allegedly built a fake webpage promoting staged videos of users profiting from trades that weren't real. The Post says that report triggered a CFTC investigation, adding: "The investigation is ongoing and no wrong-doing has been established."
As of October 26, Polymarket hasn't publicly confirmed the firing. The Post says Polymarket's spokeswoman wouldn't comment and that Modabber did not reply. Treat the details as reporting, not established fact.
The state-versus-federal fight
Several states say these contracts are gambling that needs a state license. On September 2, Michigan Attorney General Dana Nessel announced a preliminary injunction she secured that requires Kalshi to block people in Michigan from its sports contracts; each day of violation would cost $500,000. New York's attorney general and governor sued Polymarket's US arm on September 24, alleging an unlicensed gambling operation that's open to users aged 18 to 20. Kalshi itself also faces lawsuits from New York, filed in July, and Utah, filed on October 20. Michigan's order is a preliminary injunction, not a final ruling, and the New York and Utah claims are allegations courts haven't ruled on. Phantom told The Block it believes the CFTC's jurisdiction is clear and that it will follow state restrictions while the disputes continue.
What this means for you
- It's speculation. The CFTC's advice is to trade only money you can afford to lose after living expenses and savings, and to watch out for gimmicks that push you to risk more.
- Stick to registered venues. The CFTC warns you may have little or no protection with unregistered platforms outside the US. Scam "prediction" sites promising big payoffs are a known red flag.
- Know who holds your money. In Phantom's US setup, your trading balance sits with Kalshi, not in your self-custody wallet.
- Be skeptical of winning-trade videos. The Polymarket reporting is a reminder that promotional "I just won" clips may be paid or staged.
- Check your state. Availability can change as the court cases move.
Learn more about managing crypto risk and how US crypto rules work. This is education, not financial or legal advice, and it reflects company statements, regulators' pages and news reports as of October 26, 2026.
Frequently asked questions
Is a prediction market the same as sports betting?
Legally, that's the fight. The CFTC says event contracts are typically structured as swaps, a kind of derivative it regulates. States including Michigan and New York argue that sports and other event contracts are unlicensed gambling and have gone to court. For you, the money works much like a bet: if your side loses, the contract settles at $0.
Can I use Phantom's prediction markets in every state?
No. Phantom says markets depend on where you are, and The Block reported that Phantom is initially blocking sports markets in Michigan and wider sets of categories in Nevada and Washington. Access is also rolling out in stages over several weeks.
Does Phantom hold my money when I trade?
No. Phantom says Kalshi approves and holds the trading accounts and executes the trades. Your funds move from Phantom to Kalshi for each purchase, and proceeds come back to your Phantom Cash balance. Money you hold in the Kalshi app or on kalshi.com doesn't show up in Phantom.
Are prediction markets a way to make money?
We can't give personal advice. The CFTC says all speculation involves risk and suggests trading only money you can afford to lose after bills and savings. Every contract you buy at the wrong outcome goes to zero, and fees apply whether you win or lose.
Sources
- Phantom Puts Its CFTC No-Action Relief to Work, Bringing Prediction Markets to US Users (opens in a new tab) — Phantom
- Trade Kalshi prediction markets in Phantom (US) (opens in a new tab) — Phantom Help Center
- Phantom rolls out Kalshi prediction markets to US users, says it's 'confident and comfortable' amid state lawsuits (opens in a new tab) — The Block
- Understanding Prediction Markets and Event Contracts (opens in a new tab) — CFTC
- Robinhood Reports Second Quarter 2026 Results (opens in a new tab) — Robinhood Markets
- Polymarket fires top executive who was closely allied with CEO Shayne Coplan: sources (opens in a new tab) — New York Post
- AG Nessel Secures Second Order Halting Unlawful Kalshi Sports Wagers in Michigan (opens in a new tab) — Michigan Attorney General
- Attorney General James and Governor Hochul Announce Lawsuit Against Polymarket for Running Illegal Gambling Operation (opens in a new tab) — New York Attorney General
Published October 26, 2026 by Dave McNaught. Educational content, not financial, legal or tax advice. Spot an error? Request a correction.
Dave McNaught
Dave McNaught has worked in IT since 1999 and founded All Business Technologies (ABT) in 2003, a Boston-area firm providing Managed IT, Cybersecurity, Managed AI, Web Design and App Development. He publishes The Crypto Guide.