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State of Play’s TL;DR
- State officials are questioning election prediction markets ahead of the 2026 midterms.
- Some believe the contracts violate election betting laws.
Election prediction markets are drawing heavier trading ahead of the 2026 elections, and state officials are increasingly questioning whether those contracts can be regulated – or barred outright – under existing gambling laws.
It is becoming a live test of where the line sits between event trading and prohibited election wagering.
State officials challenging election contracts as trading rises
According to a report from The Washington Times, election administrators and state officials are warning that fast-growing trading on election outcomes could create new risks for election confidence and integrity.
Platforms such as Kalshi and Polymarket let users buy and sell contracts tied to political outcomes, with prices typically ranging from 1 cent to 99 cents. But whether that activity is a financial market or a form of betting remains unresolved in many places.
The National Conference on State Legislatures says half the states have statutes broadly banning betting on elections.
Maryland election administrator Jared DeMarinis called the trend “a troubling” one that officials nationwide must address. In Pennsylvania, Delaware County Elections Director Jim Allen asked his election board to add prediction market trading to the oath required for polling place and county election workers. DeMarinis said he will ask Maryland’s state election board to consider a similar statewide requirement.
Why the dispute matters for operators, regulators, and bettors
The core dispute is whether election contracts should be treated like gambling products or legitimate market instruments. Kalshi and Polymarket argue they are offering trading more akin to stocks, bonds, or commodities than casino-style wagering.
Kalshi also says federal law requires insider-trading protections on its platform. The company disclosed on Aug. 31 that North Carolina congressional candidate Laurie Buckhout received a three-year suspension and fine for trading on her own race.
Critics say market prices can shape public perception, especially if wealthy partisans push odds in a candidate’s favor. Better Markets’ Ben Schiffrin warned that a large outside bet could make a candidate look like “the front-runner” for reasons unrelated to actual voter support. Kalshi general counsel Rick Heaslip pushed back, saying attempted manipulation in a highly liquid market would fail because prices would “snap back.”
What comes next before the 2026 election
The legal fight is unlikely to be settled by courts before voters cast ballots. That leaves states weighing policy changes, worker restrictions, and public education campaigns to make clear that prediction market odds are not the same as polls or vote counts.
With billions of dollars potentially in play on questions such as control of Congress and gubernatorial races, the 2026 cycle could become a major test of how far state gambling laws reach when election trading starts to look a lot like betting.
Based on reporting by Marc Levy for The Washington Times.
