Polymarket and Kalshi allow participants to buy and sell contracts tied to the probable outcome of an event. These contracts are typically priced between 1 and 99 cents, and customers can trade them on races for mayor, governor, and U.S. Senate.

Half of U.S. states have statutes that broadly ban betting on elections. Election officials in several jurisdictions have moved to restrict participation by those involved in administering votes. Delaware County, Pennsylvania elections director Jim Allen asked the election board to add prediction market trading to the state-required oath for polling place and county election workers.

Jared DeMarinis, administrator for the Maryland State Board of Elections, stated he will ask his board to impose a requirement that election workers swear not to bet on elections. "This is a troubling trend that election administrators across the nation must deal with," DeMarinis said.

Kalshi and Polymarket officials state that prediction market activity is not gambling and does not endanger elections or democracy. They also state they have insider trading protections required by federal law to prevent candidates and campaign staffers from trading on their own races. On August 31, Kalshi suspended North Carolina congressional candidate Laurie Buckhout for three years and fined her for trading on her own race.

Ben Schiffrin, director of securities policy for Better Markets, warned of the potential for manipulation. "And all of a sudden, they’re the front-runner, for no reason other than an outside actor places a large bet on them," Schiffrin said. Eric Talley cited research by behavioral economist Colin Camerer showing that one person betting a large sum in a horse race induced others to bet on the same horse.

Joshua Mitts, Columbia Law School professor, offered a different perspective on the relationship between markets and political outcomes. "One can make the argument that the entire stock market, at some level, is affected by elections and outcomes," Mitts said. Kalshi states its research shows that events given a 60% chance of occurring happen nearly 60% of the time, though prediction markets heavily favored a candidate who lost the primary for Wisconsin governor.

Timeline

On September 22, 2023, the Commodity Futures Trading Commission issued an order prohibiting the Kalshi Contracts. The Commodity Futures Trading Commission published proposed rule titled "Prediction Markets; Public Interest Determinations" on 2026-06-12.

What's New

Additional reporting indicates that the prediction market platforms Kalshi and Polymarket are directly affected by legal actions taken by multiple U.S. states, including Maryland, as they operate within these states' jurisdictions and face regulatory challenges over their sports and election-related contracts. As of mid-2026, roughly 20 states have some form of dispute with Kalshi, Polymarket, or both, involving cease-and-desist letters, lawsuits, criminal cases, or court-ordered blocks, primarily over sports event contracts.

Historical context shows that in June 2023, KalshiEX LLC filed a certification of congressional control political event contracts under § 40.2. Kalshi is an American prediction market platform, while Polymarket is online prediction solicitation and aggregation engine.

Why It Matters

The conflict between state gambling laws and federal oversight of prediction markets creates a fragmented regulatory landscape for platforms operating nationwide. With half of U.S. states banning election betting and roughly 20 states actively disputing the operations of Kalshi and Polymarket, the legality of these contracts remains uncertain despite federal proposals.

Rising trading volumes during the 2026 election season amplify concerns among election administrators regarding integrity and potential interference. The interaction between state-level bans and the Commodity Futures Trading Commission's proposed rules will determine whether these platforms can continue offering election-related contracts in the United States.