Gambling is no longer restricted to sports. Americans can now put their hard-earned dollars on who will win an election, which party will control Congress and even who could become a future presidential nominee.
Political prediction markets such as Kalshi and Polymarket have become an increasingly evident element of American politics. With the 2026 midterm elections just around the corner, these platforms are drawing more attention and raising questions about how political betting operates, who regulates it and what happens when real money is tied to election results.
Unlike established political polls, prediction markets allow consumers to buy and sell contracts based on whether they believe an event will happen. The price of those contracts changes as people trade them.
John Burke, Senior Specialist Professor of Finance and Economics in the Leon Hess Business School, said prediction markets offer “a clear and intuitive assessment of market implied outcomes of uncertain future events.”
Burke explained the process of using Kalshi on the 2028 Republican presidential nomination. He noted how a contract predicting Vice President JD Vance to win the nomination cost 45 cents. If the prediction is correct, the contract pays $1. That market price indicates an implied probability of about 45 percent.
Those percentages are different from polling numbers. A poll asks a collection of registered voters who they support or how they plan to vote. A prediction-market percentage is produced by people buying and selling contracts based on what they believe will happen.
Political trading is already climbing ahead of the midterms. Reuters reported in June that prediction markets were preparing for increased election activity as more than 6,500 state and federal legislative seats were set to be contested in 2026. The growth has also amplified attention on how these platforms inhibit people with insider information from using it for financial gain.
Nonetheless, political betting is not regarded the same way throughout the country.
According to a report by the Pew Research Center, which utilized data from the National Conference of State Legislatures, stated that election betting is illegal in some circumstances in 32 states, including New Jersey, where election betting is entirely banned under state law.
New Jersey law states that a person cannot place a bet or wager that is decided by the result of an election, the election or defeat of a candidate, or another contingency connected to an election. The law also forbids candidates from betting with voters or providing money for another person to make such a wager.
Prediction markets have concealed the issue because platforms can be regulated as financial exchanges at the federal level. The Commodity Futures Trading Commission (CTFC) has disputed in several court cases that federally regulated prediction markets fall under its jurisdiction and that federal commodities law can block state restrictions. States have contested that position, starting an ongoing dispute over where federal authority ends and state gambling laws start.
As more money enters political markets, another key question is whether someone with substantial monetary assets could purposefully move a market’s price and make a candidate appear more or less likely to win.
“I suppose that’s possible, but it would be very costly for the manipulator as the true probabilities would not change as a result of the manipulation, hence I think it’s unlikely,” Burke said.
Another point of concern facing the business involves traders who have information that is not available to the public.
In February, the CTFC issued an advisory after two cases involving improper activity on Kalshi. In one case, an undisclosed political candidate traded contracts connected to his own candidacy. Kalshi required the trader to give up profits, issued an additional $2,000 penalty and suspended the person from the exchange for five years. The CFTC said the activity potentially violated federal rules involving the misuse of confidential information.
Reuters reported that Kalshi had suspended three congressional candidates for betting on their own races. The company has taken steps to prevent politicians and campaign staff from trading on certain political markets as election activity increases.
Polymarket has also increased its efforts to detect suspicious activity. Shana Bautista, Polymarket’s global head of investigations and intelligence, told Reuters in August that the company uses tools including blockchain analytics, machine learning and trade surveillance. According to Reuters, Polymarket said it had referred more than 100 cases to law enforcement.
Burke said the use of inside information presents an important economic question for prediction markets. He pointed to a federal case involving a U.S. Army Special Forces soldier accused of using classified information to make trades connected to the capture of Venezuelan President Nicolás Maduro.
Burke said the case emphasizes two different ways of looking at information in these markets. Trading based on nonpublic information can give one person an unfair advantage, while new information entering a market can also cause its prices to move more quickly toward the eventual outcome.
Federal regulators have continued to address those concerns as the industry grows. Burke said U.S. prediction markets are subject to anti-fraud rules under the Commodity Exchange Act, CFTC civil enforcement and potential criminal enforcement from the Department of Justice.
The CFTC has also preserved that it has authority over federally regulated prediction markets, while numerous states continue to challenge the industry’s reach under their own gambling laws. Those disagreements are continuing as prediction markets become a main part of the 2026 election cycle.
For voters, the growth of Kalshi and Polymarket just adds another set of figures to an election setting already saturated with polls, and projections. Prediction-market percentages represent something completely different: the prices traders are willing to pay based on what they imagine will occur when the ballots are counted.
