This article was originally published by Votebeat, a nonprofit news organization covering local election administration and voting access.
Votebeat is a nonprofit news organization reporting on voting access and election administration across the U.S.
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A 2004 paper on the history of presidential election betting markets kicks off with a partial quote from the transcendentalist Henry David Thoreau’s 19th-century essay “Civil Disobedience”: “All voting is a sort of gaming, like checkers or backgammon, with a slight moral tinge to it, a playing with right and wrong, with moral questions; and betting naturally accompanies it.”
Not everyone agrees with that last part. And the rapid rise of online prediction markets such as Kalshi and Polymarket are bringing that tension to the fore.
Prediction markets are websites that sell contracts that allow users to wager on event outcomes. Political examples could include which party will control the U.S. House or Senate after the midterms, for example. Typically, there are fixed payouts and the price of the contract reflects the market’s expectation of the odds of the outcome.
It isn’t yet entirely clear who regulates prediction markets and how, and markets have regularly clashed with state officials trying to rein them in. When it comes to elections, most states have laws prohibiting election betting in some form or fashion, according to a Pew Research Center analysis released in June. But many such laws predate modern prediction markets and haven’t necessarily been tested in court recently.
Kalshi recently pushed back on Wisconsin election officials after they issued an advisory about a state law dating back to the 19th century that says voters can’t cast ballots in races they’ve bet on. A Kalshi staffer said on social media the Wisconsin advisory meant election officials were engaged in “active voter suppression.”
However the legal situation shakes out, betting on elections is happening. An NBC News analysis found nearly $200 million in trading volume on midterm election outcomes on prediction markets Kalshi and Polymarket, and election officials say they are concerned about how the odds on such sites could influence public trust in election outcomes — particularly when election results differ from those the markets had favored — and about creating incentives for manipulation.
“I think it is something that we are going to have to wrestle with going into the November election and forward,” said Dean Logan, the registrar-recorder and county clerk for Los Angeles County, California, the country’s single most populous election jurisdiction, during a webinar organized by the Partnership for Large Election Jurisdictions this month.
Logan said in the Los Angeles mayoral primary in June, “early election returns differed from market expectations, and that resulted in suspicion and questioning of normal ballot processing and canvassing procedures in California.” The bottom line, he said, is that “elections administration right now is very much affected by perception and misinformation, and in our field we have to be prepared to respond to that.”
‘This is all bad’
Prediction markets say their odds reflect the wisdom of the crowds and can be more accurate than polling. And these markets have been pretty good at predicting elections in the past. For example, the 2004 paper that quoted Thoreau, by economics professors Paul Rhode and Koleman Strumpf, analyzed data on election gambling between 1868 and 1940 and found that the historical markets “did a remarkable job forecasting elections in an era before scientific polling.”
But prediction markets differ from polls in important ways. Polls are representative samples of just the voters who live in the state or district in question; prediction markets are open to anyone, and the more money a person bets, the more influence they have on the odds.
And election officials, already worried about low public trust in elections, are concerned the odds on these markets could be manipulated to influence public perception of a contest or create new financial incentives to shape outcomes. Kalshi and Polymarket did not respond to requests for comment.
Jim Allen, the elections director of Delaware County, Pennsylvania, which had already banned election workers from directly betting on elections, earlier this year added a ban on using prediction markets to do so. He likened it to referees betting on the outcome of a basketball game.
The new language, he said during the PLEJ webinar, “kicked off a conversation at our poll worker training. There was one person out of 383 precincts, one person who stood up and they said, ‘Well, what if we just want to make a minor bet on what turnout will be? That’ll keep things interesting.’ And we said, ‘No, this is all bad.’”
Carrie Levine is Votebeat’s editor-in-chief and is based in Washington, D.C. Contact Carrie at clevine@votebeat.org.
