Court Ruling Could Allow Election Prediction Markets in US

Prediction markets platform Kalshi could start offering a legal way to bet on federal elections in the United States as early as the end of this week, thanks to a ruling by a District Court judge in Washington state.

US District Court Judge Jia Cobb ruled in favor of Kalshi last Friday, overturning a decision by the Commodity Futures Trading Commission (CFTC) that prohibited the speculation on the outcomes of Congressional elections and similar markets. 

Kalshi Says Time Has Come for Congressional Prediction Markets

The CFTC made a decision last September, telling Kalshi that it could not offer prediction contracts on which party would control the Senate or the House of Representatives after the 2024 elections. The commission ruled that such markets were illegal gambling activity that “could potentially be used in ways that would have an adverse effect on the integrity of elections, or the perception of integrity of elections.”

Friday’s decision could open the door to Kalshi – and potentially other prediction platforms – to allow Americans to wager on their own elections. But there’s still the matter of a Thursday hearing this week in which the court may outline the rationale for its decision and its implications, things that Judge Cobb did not do as part of her Friday ruling.

In addition, Thursday’s hearing may well consider the CFTC’s request for a two-week delay in the case. Kalshi is looking to avoid such delays, saying that it is far beyond the time to get these markets available to users in the United States.

“The commission lost, fair and square, on the law,” Kalshi wrote in a filing with the court ahead of Thursday’s hearing. “It should not be allowed to snatch a procedural victory from the jaws of defeat by running out the clock.”

Depending on the outcome of Thursday’s hearing, Kalshi – and, potentially, other platforms – could start offering bets on congressional elections as soon as Friday. It would see likely that betting on the presidential election would follow as well, though Kalshi hasn’t started that it plans to offer a market for that race.

Political markets at sites like Kalshi offer contracts on outcomes that can be traded between users. If the terms of a contract are met – such as a candidate winning an election – that contract pays out at $1, while losing contracts will pay nothing. 

Election Betting Common Outside United States

Kalshi isn’t the only prediction platform that offers political markets. The Iowa Electronic Markets is a not-for-profit futures market that offers contracts on political election results and other real world events, while PredictIt is a similar marketplace operated by Victoria University of Wellington in New Zealand. The CFTC has also accused Victoria University of not complying with activities the commission had approved, though a temporary injunction currently allows PredictIt to continue operating in the United States.

There is nowhere in the United States where sportsbooks are authorized to offer election betting, and this ruling would not change that. Outside of the United States, betting on elections is a much more common practice. European bookmakers regularly offer wagering on American and European elections, among others, and crypto-based prediction market Polymarket does the same, though it limits access for American users. 

After Tuesday’s debate performance, Vice President Kamala Harris has become a slight favorite at many traditional sportsbooks; one example is William Hill, where Harris (-120) is the favorite over former President Donald Trump (+100). 

Prediction markets vary in their current pricing. At PredictIt, where the number of contract holders and the amount any one user can hold on a position are limited, Harris shares are trading at $0.56, as opposed to $0.47 for Trump. On Polymarket, where there are no such limits, Trump is trading at about $0.50, with Harris at $0.49.

(Screenshot from Kalshi.com.)