Election administrators in several U.S. states are preparing to enforce laws that ban residents from betting on election outcomes, even as federal regulators have given a green light to prediction market platforms. This pushback from state officials highlights a growing tension between state-level election integrity concerns and federal oversight of financial markets.
Maryland, Texas, and Arizona are among the states with explicit laws prohibiting election betting. In Wisconsin, state law prevents residents from voting in an election in which they have placed a wager. Jared DeMaranis, Maryland's election administrator, has stated his intent to pursue legal action against individuals engaging in election betting, potentially referring cases to the state prosecutor if illegalities are detected.
"This is going to be a growing issue and something that we need to stop in its infancy," DeMaranis told ABC News. He indicated that while platforms currently operate under federal oversight, the focus for enforcement in states like Maryland will be on the individuals placing the bets.
These state-level efforts come after federal regulators and courts have increasingly allowed wagering on political events. Platforms like Kalshi and Polymarket offer bets on various election-related outcomes, from gubernatorial race winners to congressional district victory margins. The Commodity Futures Trading Commission, which oversees these prediction markets, has classified elections as "contests, not gaming," further facilitating their operation.
However, more than half of U.S. states have existing laws that restrict or ban election betting, according to Pew Research Center data. State officials are now grappling with how to enforce these long-standing rules in the face of evolving federal regulations and the increasing popularity of prediction markets.
Arizona's attorney general previously filed criminal charges against Kalshi, alleging it operated an illegal gambling business. That case was temporarily blocked by a federal judge who noted the Commodity Futures Trading Commission's argument that prediction markets fall under federal jurisdiction. The Arizona attorney general's office declined to comment on the active case.
Officials in Texas have also expressed concerns about the potential for election manipulation by individuals with financial stakes in election results. Christopher McGinn, executive director of the Texas Association of County Election Officials, noted discussions about how to handle prediction markets, particularly regarding the incentive for individuals to manipulate outcomes or spread misinformation.
Advocates for prediction markets argue that these platforms enhance political forecasting and can be more accurate than traditional polls. Conversely, many election experts and officials warn that election wagering could undermine the integrity of the electoral process and create opportunities for profit through insider information. Rick Hasen, an expert in election law at UCLA, cautioned about the potential for manipulation, stating, "We don't want to start thinking of elections as a financial incentive."
In Washington, D.C., some lawmakers are seeking to prohibit election outcome contracts outright. Reps. Jamie Raskin (D-Md.) and Sen. Jeff Merkley (D-Ore.) have introduced legislation aimed at preventing such wagers, arguing they contribute to "civic cynicism and distrust in our democratic institutions."
Election administrators like DeMaranis feel they are on the front lines of this issue, noting that many of their colleagues are unfamiliar with prediction markets. He described his efforts to raise awareness among national election officials as feeling like the "canary in the coal mine," emphasizing the potential threat to public trust in the electoral process. "When you have people that are engaging in election-related wagering, the integrity of the entire process now comes into question," DeMaranis said.