politics
Is betting on elections using prediction markets illegal? Many states are unsure as midterms approach
Twenty-three states have laws banning betting on elections, according to Pew Research. Not every state is sure these rules apply to prediction market trades.
TL;DR
- Twenty-three states have laws banning betting on elections, with two states prohibiting voters who bet from participating.
- The applicability of these laws to prediction market trades is uncertain in many states.
- States like Wisconsin and Colorado have explicitly stated their laws cover prediction markets, while others, like New York and Arizona, are undecided or have pending litigation.
- The Commodity Futures Trading Commission (CFTC) considers event contracts as regulated swaps, asserting federal jurisdiction, while states view them as gambling, which they regulate.
- States may argue their constitutional authority over elections extends to regulating prediction markets related to election outcomes.
- Legal experts suggest states have a stronger preemption argument regarding election management compared to sports event contracts.
- Prediction market platforms like Kalshi and Polymarket assert exclusive federal jurisdiction over regulated markets.