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The significant boom of prediction markets is pushing U.S. elections into uncharted territory, prompting concern and scrutiny about the risks and regulation of betting on political outcomes.
Kalshi, Polymarket and other platforms process trading volumes in the tens of billions of dollars each quarter as users bet on world events, from sports and pop culture to which party will win the House this fall and whom Democrats will pick for president in 2028. Some election observers even look to the markets as key tools alongside polling for analyzing races and issues.
But the surge in prediction markets’ popularity has also ushered in a new wave of skepticism and concerns about how political betting could impact elections, whether through insider trading or the gamification of politics more broadly.
“It’s the wild west right now,” said Geoffrey Skelley, chief elections analyst at Decision Desk HQ. “We’re in real new territory, and it’ll be interesting to see how state and federal governments and others respond to it.”
The popularity of prediction markets has exploded since 2024, when a federal court ruled the Commodity Futures Trading Commission (CFTC), the small financial regulator monitoring derivatives markets, couldn’t block betting on the outcomes of federal elections.
With the click of a button, bettors can buy shares on potential outcomes — and then reap a payout if that outcome occurs. When it comes to politics, proponents of prediction markets argue they offer a valuable snapshot of fast-moving public opinion, helping to inform politicos and policymakers.
Election watchers can use the markets to “get a gauge of where conventional wisdom is” on a particular race, Skelley said.
“They’re holistic, they’re taking in a bunch of information, and so I do think that they are helpful for understanding sort of where people think a race is and involving other data points besides polling,” he added.
For example, a whopping total of more than $1.2 billion has been spent through Polymarket on the question of the Democrats’ potential 2028 presidential nominee, which, consistent with some polls, has seen California Gov. Gavin Newsom in the lead while support for Rep. Alexandria Ocasio-Cortez (D-N.Y.) and others has ticked up.
But critics fear that wagering millions of dollars on U.S. elections poses risks.
Concerns about insider trading surged earlier this year after controversial bets were placed around President Trump’s operation to oust former Venezuelan President Nicolás Maduro. Kalshi took action in April to fine and suspend three congressional candidates that the market said had bet on their own elections. And in an NPR report last month, campaign staffers told the outlet they’d made “thousands” betting on their own candidates, acting on information before it had been made publicly available.
“Insiders trading on election-related markets here in the U.S. has the incentive to in some way corrupt the electoral process,” said Matthew Motta, a political scientist and health law professor at Boston University who is studying the social and economic impacts of legalized gambling.
“I think that mirrors what we see happening internationally, wherein insiders are making a quick buck on things that are happening abroad, and potentially, although we cannot prove it, altering the timing of what they do, altering the decisions they make in order to make money,” he continued.
Motta pointed to a hypothetical example of a fringe candidate who could, in theory, inject money into a prediction market to manufacture the appearance of momentum behind the campaign.
“You could have candidates using the prediction markets not just to make a quick buck — although certainly they could, and in fact reporting has shown that some folks are — but to potentially manipulate the outcome of elections,” Motta said.
That’s all left policymakers in “the wild west in terms of regulation,” Motta said, in an industry that’s developing much faster than federal infrastructure and rulemaking.
Kalshi and Polymarket have their own bans against insider trading, but critics have argued such bans are not enough.
“Polymarket surveils and monitors for insider trading and other illegal activity, consistent with other markets,” a spokesperson for the platform told The Hill in a statement. “Although we do not discuss pending investigations or specific matters, our internal process has led to nearly 100 wallet referrals to law enforcement to date including the referrals that resulted in the only arrests and first and second prediction markets insider trading cases charged in the United States.”
Senators this spring barred lawmakers and staff from trading on prediction markets. Others have proposed a ban on so-called death markets, which include trades on topics such as war and terrorism.
More than half of states have laws that prohibit betting and wagering on elections, at least under some circumstances, according to a Pew Research Center report released Tuesday. But the Trump administration has filed several suits to block those actions in several states, arguing the CFTC has exclusive authority over the platforms.
CFTC Chair Michael Selig wrote in a February op-ed that the agency would not “sit idly by while overzealous state governments undermine the agency’s exclusive jurisdiction over these markets by seeking to establish statewide prohibitions on these exciting products.”
“These exchanges aren’t the Wild West, as some critics claim, but self-regulatory organizations that are examined and supervised by experienced CFTC staff,” Selig said.
Experts also stress that, though misconduct in prediction markets is possible, it’s hard to quantify just how significant of a risk potential misconduct poses to U.S. elections.
“I do think that we will see unique issues come up in prediction markets on elections. … I do think that people are a little bit sick of how much power is allocated to people with money,” said Ilya Beylin, a professor at Seton Hall Law School who has studied prediction market oversight.
“Whether it’s insider trading or manipulation or any other misconduct in the context of elections and betting on elections, we just don’t know the incidence of misconduct. We don’t know that there is a high level,” he added. “There might be a high level, but we don’t know that.”
Still, critics say the exponential growth of interest in and the eye-popping dollar amounts cycling through the platforms raise enduring questions about what should happen next — from legal questions of whether prediction markets count as gambling to ethical questions about whether the markets should exist at all.
“The potential for malfeasance is the reason why we should take regulatory action,” Motta said, “even if that potential hasn’t been actualized.”
There are also signs of skepticism among everyday Americans about placing bets on politics, even as traffic surges to the prediction market sites.
A poll released Monday from Politico and Public First showed that, while a majority of Americans approve of betting money on sports, just 30 percent are open to legal betting on election outcomes.
And while more than 50 percent of respondents in the poll said they would not consider placing a prediction market bet, experts forecast this is only the beginning.
“One of the issues with that sedimentary history in the United States is that as these institutions come into being they will not go away voluntarily and are carving out new niches for themselves as new products are coming along,” said David Bieri, an economist and professor at Virginia Tech specializing in international money and finance infrastructure.
“The most prominent stuff, the Maduro trade that everybody has read about, that’s an issue. Politicians betting on their own election outcomes, that’s an issue. But that’s in some ways quite easy to deal with. The larger issue is: What role are these markets going to play in the future?”
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