Prediction Markets in Vermont: Legal Status, Platforms and the Three-Operator Cap

Yes. As matters stood on August 2, 2026, prediction markets are available to Vermont residents and the state has taken no step to stop them. Kalshi, Polymarket and the other CFTC-registered exchanges operate in Vermont under the federal Commodity Exchange Act, not under Title 31 of the Vermont Statutes Annotated, which is the chapter that governs the three licensed sportsbooks. Vermont is not on the list of nine states the CFTC has sued to defend these markets, the Department of Liquor and Lottery has sent no cease-and-desist letter, and the Attorney General has filed nothing. In practical terms Vermont is a quiet, available state rather than a battleground.

The reason comes down to what Vermont’s gambling law actually claims authority over. When lawmakers passed H.127 — enacted as Act 63 of 2023 and codified at Title 31 V.S.A. Chapter 25 — they built a licensing regime for “sports wagering” offered by operators the Department selects. That framework sets a 21-and-older floor, channels every legal mobile bet through a hand-picked licensee, and makes running an unlicensed sports book a crime. What it does not do is reach a contract listed on a federally designated contract market. Buying a “yes” on a Kalshi sports market is not placing a wager with a Vermont-licensed book; it is taking one side of a derivatives trade cleared through a federal exchange. That distinction — swap or bet — is the fault line under every prediction-market case in the country, and it is why a Vermont resident can reach these platforms even though only three companies hold a state betting license.

The honest caveat is that “available and unchallenged in Vermont” is not the same as “settled everywhere.” Federal appeals courts have split on whether sports event contracts are lawful swaps or unlicensed gambling, and the question is drifting toward the U.S. Supreme Court. Vermont has simply chosen, so far, not to test it — a notable posture for a state that otherwise regulates its betting market with an unusually firm hand.

To get at why event contracts sit so oddly next to Vermont’s rules, look at how deliberately narrow those rules are. H.127 authorized the Department of Liquor and Lottery to issue between two and six online sportsbook licenses — and only online. Vermont has no commercial casinos, no tribal casinos, and no retail sportsbooks; the entire legal market lives on a phone. After a competitive bidding process in 2023, the Department picked three winners: DraftKings, FanDuel and Fanatics. BetMGM and Penn Entertainment’s ESPN Bet both applied and were turned away, even though the law left room for more. Governor Phil Scott signed the bill on June 14, 2023, and the three apps launched together on January 11, 2024.

Vermont also priced its market aggressively. Rather than a flat rate, operators bid the share of adjusted gross sports wagering revenue they would hand the state, and the winning bids landed high by national standards — reported at roughly 31 percent for DraftKings and Fanatics and about 33 percent for FanDuel. For context, many states settle for 10 to 20 percent. Vermont wanted a small number of operators paying a large cut, and that is exactly what it got.

Here is the irony that defines this page. Vermont’s own statute, in its definition of “sports wagering,” lists “exchange wagering” — peer-to-peer betting where customers wager against each other rather than against the house — as one of the forms a licensed operator may offer. In other words, the Legislature specifically contemplated exchange-style betting and then reserved it, like everything else, for the three companies it licensed. A CFTC exchange runs a real order book, matching Vermonters against other traders nationwide, and does precisely the thing the statute describes — but it holds no Vermont license, pays the state no revenue share, and answers to Washington instead of Montpelier. The state built a fence around exchange wagering; a federal exchange stands on the other side of it, reaching customers the cap was designed to limit. No one in Vermont has yet tried to argue that Kalshi’s order book is the “exchange wagering” its statute reserves, and unless a regulator makes that move, the two systems run in parallel on the same phone.

Precision matters here, because Vermont’s law is real and it has teeth — just not teeth aimed at federal exchanges. Title 31 V.S.A. Chapter 25 gives the Department of Liquor and Lottery, through its Board and Commissioner, control over who may offer sports wagering and on what terms. The definitions section sweeps in the familiar bet types — single-game bets, parlays, teasers, over-unders, moneylines, in-play wagers, proposition bets, pools and exchange wagering — but every one of those is a “sports wager” only when offered by, or as, a licensed operator. The chapter restricts betting on Vermont college teams, on in-state high school and college events, and on contests where most participants are minors.

On paper, that is a serious deterrent to an unlicensed sports book. Whether it reaches a CFTC-registered exchange is the unanswered question — and answering it would mean the Department first taking the position that an event contract is a “sports wager” under Chapter 25, then trying to enforce state law against a federally regulated venue. That is the exact fight Nevada, Massachusetts, Ohio and others are losing, winning or slogging through in court right now. Vermont has not started it. As of August 2, 2026, the Department of Liquor and Lottery has published no guidance treating event contracts as sports wagering, and the Attorney General’s office has taken no public enforcement position on them.

Anyone who has used DraftKings, FanDuel or Fanatics under a Vermont license will notice an exchange behaves differently. A licensed Vermont sportsbook is the house: it writes the odds, takes the other side of your bet, and profits from the vig baked into the line. An event exchange is a marketplace instead. You are matched against another trader, and the platform collects a fee rather than a built-in spread.

Each market is a question with two outcomes, priced from one cent to 99 cents, where the price reads as the market’s implied probability. Buy “yes” at 62 cents and you are paying for a roughly 62 percent-priced outcome; if it resolves in your favor the contract settles at one dollar and you keep the 38-cent difference, and if it resolves against you it goes to zero. Because you can sell a position before the underlying event ends, you can lock in a gain or cut a loss mid-market the way you would trade a stock, instead of sweating one bet to the final buzzer. On order-book venues like Kalshi you trade against other users at prices they will meet, which makes a Vermonter one participant in a national pool of buyers and sellers rather than a customer of a bookmaker. That structural difference — marketplace versus house — is also the heart of the platforms’ legal argument that they are exchanges, not sportsbooks, and it is why Vermont’s law, written around the house model, does not obviously fit them.

The menu is far wider than a licensed Vermont sportsbook can legally offer, and the state’s own politics are a live example — exchanges have run markets on Vermont statewide races and on national contests that no VT-licensed book is allowed to touch, because Chapter 25 does not cover election wagering. That reach into non-sports categories is a big part of why event contracts feel different from the three apps Vermont approved.

One Vermont-specific wrinkle involves age. Vermont set 21 as the floor not only for sports betting but for daily fantasy sports too — H.127 raised the DFS minimum from 18 to 21 when it passed. The CFTC exchanges, by contrast, generally allow trading at 18. So an 18-, 19- or 20-year-old Vermonter who is locked out of both the licensed sportsbooks and the fantasy apps can still open an account on a federal exchange — a consumer-protection gap covered further down.

The full roster and how each venue is structured are catalogued at the prediction markets hub.

For a Vermonter the choice between an exchange and a licensed app is not only about odds — it is about which legal system stands behind you. The differences are practical and they cut both ways.

If your priority is state-supervised recourse, a licensed operator sits inside Vermont’s net: the Department of Liquor and Lottery can take a complaint and the state runs a responsible-gaming and self-exclusion program. Choose an exchange and you gain reach — election, economic and weather markets a Vermont book cannot legally offer — but you trade under federal rules with no state safety net behind them. For the licensed side, see our guide to Vermont’s online sportsbooks, the national map of states with legal online sportsbooks, and the broader online sportsbooks hub. For the wider legal backdrop, our overview of online gambling legality in the U.S. ties the threads together.

Money made on an event exchange is taxable, and the paperwork is murkier than a Vermont bettor might expect. Kalshi, for one, does not hand out 1099-B forms for event-contract trading, and the IRS has published no formal guidance classifying these products — whether gains count as gambling income, capital gains or Section 1256 contract income is unsettled. Reporting can also differ between an exchange-native product and one distributed through a brokerage, so a Vermont trader should keep detailed records and treat each platform’s paperwork as its own case. None of this is tax advice; a resident with meaningful volume should talk to a professional, and Vermont income tax applies on top of the federal bill.

The thin protection here deserves equal weight, and it is sharper in Vermont than in most places precisely because the state runs such a controlled market. A licensed Vermont sportsbook plugs into state oversight — a complaint channel through the Department of Liquor and Lottery, a state self-exclusion registry, a 21-and-older floor that the same law extended to fantasy sports. A federal exchange sits outside all of it. If a Vermont trader has a dispute, the recourse is federal and the platform’s own process, not the Department. There is no Vermont self-exclusion list that reaches Kalshi or Polymarket, and the 18-and-older access means a college-age resident shut out of both the sportsbooks and the fantasy apps can still trade contracts. FanDuel Predicts is the notable exception in the field, shipping voluntary deposit limits, self-exclusion tools and links to behavioral-health support — but that is a company choice, not a Vermont mandate.

Regional context makes Vermont’s hands-off stance look like a choice rather than an oversight. Connecticut sits at the aggressive end: it sent cease-and-desist letters to Kalshi, Polymarket and Crypto.com in December 2025, a federal judge temporarily blocked enforcement, and the CFTC sued Connecticut in April 2026. Massachusetts has been openly combative — a federal judge let the state pursue a ban on Kalshi’s sports contracts in January 2026, and the fight reached the Massachusetts Supreme Judicial Court. Rhode Island is on the CFTC’s list of sued states. New Hampshire and Maine, like Vermont, have stayed quiet.

So a New England trader’s experience swings sharply depending on which side of a state line they stand, and Vermont currently sits with the permissive group alongside its two most similar neighbors. That is not guaranteed to hold. Vermont regulates its licensed market more tightly than almost any state — three operators, a high revenue share, a 21-plus floor across the board — which is exactly the profile of a state that could decide event contracts undercut the system it built. It simply has not moved yet. Compare any of these states through the site’s state-by-state index, or dig into Vermont’s licensed market on the main Vermont gambling sites page.

Vermont’s calm depends mostly on forces outside Montpelier. Some events could reset the board:

• The Ninth Circuit ruling. A consolidated Nevada appeal, argued April 16, 2026, will either create a direct circuit split with the pro-platform Third Circuit or not. A ruling against the platforms would push the issue toward the Supreme Court and embolden states that have held back — potentially including Vermont.
• A Supreme Court case. New Jersey has until September 2026 to petition for review of its loss, and projections point to a possible decision by mid-2027. However the Court rules would bind Vermont regardless of what its Legislature does.
• The CFTC’s final event-contract rule. A proposal circulated in June 2026 would review contracts category by category and bar certain types outright, which could narrow what a Vermonter can trade even with no state action.
• Federal legislation. The Prediction Markets Are Gambling Act, introduced March 23, 2026, would bar registered exchanges from offering sports and casino-style event contracts; if it passed it would moot the entire state-by-state map, Vermont included.
• A Vermont policy shift. The Department of Liquor and Lottery or the Legislature could take the position that event contracts are unlicensed “sports wagering” under Chapter 25 — especially if the three licensees, who pay the state a large revenue share, argued that untaxed exchanges are eating their market. Nothing of the sort is pending as of August 2, 2026.

• Vermont Department of Liquor and Lottery — liquorandlottery.vermont.gov
• Dept. of Liquor and Lottery, “Mobile Sports Wagering Goes Live January 11, 2024” — liquorandlottery.vermont.gov
• H.127 / Act 63 of 2023, bill status — legislature.vermont.gov
• Act 63 as enacted (full text) — legislature.vermont.gov
• Title 31 V.S.A. Chapter 25, Sports Wagering (including Section 1325 penalties) — legislature.vermont.gov
• Office of the Vermont Attorney General, Gambling — ago.vermont.gov
• Commodity Futures Trading Commission — cftc.gov

Legal status current as of August 2, 2026. Prediction-market law is changing quickly; verify platform availability and any court or agency development before relying on it.