Election Betting in the US: A New Chapter for 2024 Voters
As Americans head to the polls in this election cycle, some are exploring a new way to participate—election betting. Once limited to bettors outside the United States, this unique form of political engagement has recently been made legal on regulated platforms, giving Americans the ability to wager on election outcomes. Here’s what you need to know about this shift and what it means for democracy.
The Legalization of Election Betting in the US
In a historic ruling, the DC Circuit Court of Appeals recently allowed Kalshi, a prediction market, to legally offer election betting in the US. This shift has opened up the doors for regulated political wagers, with Kalshi alone seeing over $100 million in traded election bets so far.
Other US-based platforms are jumping on the trend following the court’s decision, signaling a new era for political prediction markets in the US. This ruling is significant because while prediction markets aren’t new globally, they’ve faced restrictions in the US for decades due to a mix of state laws and federal regulations.
What Exactly is Election Betting?
Election betting allows individuals to wager on the outcomes of political events, such as:
- Who will win the 2024 Presidential election?
- Which party will control Congress?
- The margin of victory in key swing states like Pennsylvania and Wisconsin.
Prediction markets claim they’re about forecasting, not just gambling, and often promote the idea that they help “hedge bets” by creating a space where people can back different political outcomes. However, not everyone agrees that election betting is purely predictive, with some watchdogs like the Commodity Futures Trading Commission (CFTC) arguing that it may compromise the perception of the democratic process.
The Legal Backdrop
Kalshi’s victory in the appeals court hasn’t entirely settled the legal landscape. Here’s where things stand:
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Kalshi’s Appeal Victory: The DC Circuit Court upheld Kalshi’s right to offer political contracts, allowing them to operate legally, at least for now.
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CFTC’s Position: The CFTC initially sought to prevent Kalshi’s political contracts, arguing that they could harm public trust in the democratic process. Despite the appeals court’s ruling, the CFTC could return to court with further evidence if they find that election betting causes real harm.
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A Potential Ban on Election Contracts: In a broader move, the CFTC is proposing a new rule that could ban contracts on events like elections and sports, aiming to curb event-based betting. If passed, this rule could reshape the market again, potentially making political betting illegal once more.
Political Betting is Nothing New
Interestingly, the roots of political gambling in the US go back more than a century. Political betting was a staple in the late 1800s and early 1900s, with bets often placed in places like Wall Street. This betting culture was largely informal, with odds published in newspapers, but it mostly disappeared after the 1940s.
While political gambling has been illegal in most of the US for decades, some academic institutions have studied it through research-oriented platforms. For example, the University of Iowa has run a research-focused prediction market since the late 1980s, and PredictIt operates in the US under a research-focused partnership.
Who Can Place Bets?
Kalshi is currently the only federally regulated platform where Americans can place election bets. However, they have strict guidelines on who can participate:
- Who’s Allowed: US residents not affiliated with campaigns, polling stations, or decision desks in media.
- Who’s Barred: Campaign staff, poll workers, and decision desk employees are prohibited to ensure transparency and avoid conflicts of interest.
Meanwhile, other offshore, crypto-based markets like Polymarket remain closed to US residents due to regulatory challenges, highlighting the complexity of event-based betting in the US.
Platforms Participating in Election Betting
Several platforms now support political betting, although access varies:
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Kalshi: Fully regulated in the US, offering options on key election outcomes like Presidential race results and Congress control.
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Robinhood: Known as a trading app, Robinhood entered the political betting scene, offering election contracts for the first time.
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PredictIt: Although embroiled in its legal battle with the CFTC, PredictIt has long offered election bets and remains active for now.
With this variety of options, Americans interested in election betting should research each platform to find the one that suits them best. Just remember that, unlike Kalshi, some options may lack the CFTC’s regulatory oversight.
The Risks and Concerns Around Election Betting
Critics argue that betting on political outcomes could distort or degrade public perception of the election process. Here are some concerns:
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Erosion of Democratic Integrity: As the CFTC points out, election betting could make the democratic process appear less genuine, turning elections into mere “games” for profit.
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Potential for Abuse: If campaigns, media, or key political players were to place bets, it could incentivize actions that sway the outcome for profit—a legitimate concern in a high-stakes election.
Meanwhile, platforms like Kalshi defend political prediction markets as a valuable forecasting tool, similar to financial markets. They argue that regulated prediction markets create transparency and could even enhance voter engagement by adding a predictive element to elections.
What Lies Ahead for Election Betting?
The future of election betting is uncertain. The CFTC’s proposal to ban event-based contracts could significantly impact the industry if implemented. Here’s what to watch for:
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Upcoming Court Rulings: The CFTC’s request to expedite Kalshi’s case could bring new developments in the coming months. If successful, it may restrict political betting markets in the future.
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Future of Event-Based Betting: If the CFTC finalizes its proposed rule, it may signal a more permanent ban on election and event-based contracts, forcing prediction markets to fight back in court.
As the legality of political betting hangs in the balance, Americans are, for the first time in modern history, able to legally wager on elections through regulated platforms like Kalshi. For now, the future of election betting may depend on both the courts and the CFTC’s regulatory direction.
Learn More:
- Kalshi (Kalshi prediction markets)
- federally regulated platform (federal regulations for election betting)
- Commodity Futures Trading Commission (CFTC and political betting regulations)
- PredictIt (PredictIt’s election betting platform)
- event-based contracts (CFTC proposal on event betting)
