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- State election officials are seeking restrictions on election worker trading and voter education to counter potential market manipulation.
- Legal disputes continue in courts to establish whether state gambling laws give authorities the power to regulate prediction markets.
State election officials are weighing new safeguards around prediction market trading as platforms, such as Kalshi and Polymarket, draw heavier action on the 2026 elections, raising questions about market influence, election confidence, and state authority to regulate the activity.
The concern for regulators isn’t just whether these contracts are legal. Officials quoted by the Associated Press said expanding election trading could shape public perception of who is ahead, especially as billions of dollars could eventually be wagered on outcomes such as control of the House, Senate, and major governorships.
Election officials warn of confidence and integrity risks
Maryland election administrator Jared DeMarinis called the growth in election trading “a troubling trend that election administrators across the nation must deal with.” According to the report, election administrators are discussing public education campaigns to make clear that prediction market prices are not polls or vote counts.
The article said some officials also want direct limits on election workers participating in the markets. In Pennsylvania, Delaware County elections director Jim Allen asked the local election board to add prediction market trading to the state-required oath for polling place and county election workers. DeMarinis said he plans to ask Maryland’s state election board to consider a similar requirement statewide.
One concern raised by analysts is that a wealthy partisan could briefly push up a candidate’s odds with a large trade, then use those odds to create the impression of momentum. Ben Schiffrin of Better Markets said an outside actor could make a candidate look like the front-runner simply by placing a big bet.
Kalshi points to market liquidity as a defense
Kalshi and Polymarket argue their products are not gambling and do not threaten elections or democracy. Kalshi said its markets track outcomes closely and that any attempted manipulation would be punished by other traders seeking profit.
Kalshi adviser Rick Heaslip told the AP that in a highly liquid market, pricing would “snap back” and the manipulator would lose money. The report also cited research discussed by Eric Talley suggesting a large trade can temporarily skew expectations before the market corrects.
The AP story pointed to at least one recent enforcement action against an operator. On Aug. 31, Kalshi disclosed a three-year suspension and fine for North Carolina congressional candidate Laurie Buckhout for trading on her own race.
Courts still have to decide how far states can go
The legal backdrop remains unsettled. The AP reported that courts are already handling litigation over whether states can regulate or ban prediction markets under state gambling laws. That question matters because the article said half the states have statutes broadly banning betting on elections.
Law professor Joshua Mitts told the AP that states have a clear election-integrity argument for wanting these contracts not to trade at all, even as broader debates continue over whether election-event contracts should be treated differently from other forms of event-based trading.
What comes next is likely to happen at both the state board and court level: election officials are considering new worker rules and voter education efforts, while judges sort out whether states can restrict these markets before trading intensifies further in the 2026 cycle.
Source: As reported by fox16.com.
