Political Betting in the USA

Political betting is illegal in the United States with some exceptions. Platforms such as Predict and Kalshi can still offer limited and specific betting markets on political elections, although Kalshi has recently come head-to-head with the Commodity Future Trading Commission (CFTC) and is awaiting a ruling that could allow it to accept political bets. Kalshi argues that it offers market-based forecasting rather than gambling.

There are no federal laws that allow pollical betting, and the overturning of the Professional and Amateur Sports Protection Act (PASPA) in 2018 did nothing to change this. To sum up, political betting is not legal in the United States, but there is certain wording of the law that makes it possible for PredictIt and Kalshi to offer their markets in limited capacity, something that Kalshi is trying to change.  

Can I Bet on US Elections?

Yes, you absolutely can. Although you need to be mindful of the increased scrutiny that these platforms are facing, there are opportunities to weigh in on the elections, not so much to influence the outcomes as to leverage your knowledge of the electoral processes in the country.

These platforms can be outlawed indefinitely by the CFTC and a future administration in the United States, but for the time being, they remain legitimate options to bet on political outcomes, for want of a better word.

What Are the Laws on Political Betting in the USA?

Interestingly, the laws that prohibit betting on politics in the United States are more or less the same laws that previously prohibited sports betting from becoming legal. There are three major pieces of legislation that can be cited here.

• The Federal Wire Act of 1961: The Federal Wire Act has been used to historically combat organized crime, but its applications have been coopted to also prohibit the transmission of wire data, meaning the Internet, across state borders, effectively prohibiting sports betting. The implications of the Federal Wire Act are largely perceived as detrimental, although political betting is constrained by the other pieces of laws on this list more so than the Federal Wire Act.
• The Unlawful Internet Gambling Enforcement Act of 2006: Another seminal piece of legislation, UIGEA was passed to crack down on the proliferation of so-called gray area Internet platforms that made casino, sports betting, and poker available to a large number of players without the proper authorization. It must be noted that UIEGA specifically affects payment providers and payments to and from platforms that are considered to be offering an illegal gambling product.
• The Commodity Exchange Act: This one is the trickiest of all. Political betting platforms, Kalshi included, have been trying to offer contractual future markets in which users trade shares on political outcomes rather than bet outright on an event. The CEA, as the legislation is known by its acronym, alleges that such attempts are illegal still and fall under the remit of the CFTC to regulate.

These three laws are the basis on which political betting remains off-limits for the most part. However, there are further state laws that specifically prohibit the offering of political betting markets.

Why Does Political Betting Still Take Place in the USA?

This is a good question. To clarify, the status quo remains unchanged. Political betting is illegal, and gambling on political contests is not regulated under any single law. There are, however, very specific exemptions.

To begin with, platforms do not claim that they are offering betting markets. PredictIt and Kalshi are both claiming to be prediction markets.

They are still considered to be a legal gray area, because there have been multiple challenges to shut their operations, particularly by the CTFC which believes that these platforms should be subject to the CEA.

The CFTC has been a long-time detractor of the whole idea of “political event contracts,” because they bear a striking resemblance to traditional sports betting. Basically, PredictIt and Kalshi avoid outright betting by making it so that players can trade shares on the outcomes of political events.

This particular definition makes it so that Kalshi and PredictIt may continue to offer political betting markets. There are other circumstances, however. Both Kalshi and PredictIt understand that they are on thin legal grounds at best.

This is why each prediction market is capped in terms of participants, and PredictIt limits participants to $850 per market, which means that there are fairly small amounts wagered on electoral events.

This in turn does away with the qualm that the platforms may be used to subvert the outcome of elections by galvanizing irrational public support driven by profiteering.

Another important thing to observe is that Kalshi and PredictIt provide their data to academics and researchers who are keen on accessing it to analyze and forecast elections and better understand voters.

What Platforms Offer Political Betting in the USA?

As we have established by now, there are a few platforms that operate in gray area in the United States. The CFTC has been actively challenging Kalshi, attempting to prohibit it from offering contracts and betting markets, and the debate is raging on in 2024 as well.

Here are the platforms that offer political betting and are accessible in the United States, although their legality remains a contentious issue at best.

• Kalshi: Kalshi is a platform that styles itself as a prediction market, allowing it to operate in a legal gray area in the United States, and offer political betting markets, among other options. The platform does not contend that it maintains “betting markets,” however, but describes its offer as shares that can be traded between consumers who then take a chance on the outcome of a political event. The correct term employed by the platform is future contracts. Kalshi has clashed several times with the CFTC already over this terminology.
• PredictIt: PredictIt is a similar platform that uses future contracts and offers users the chance to buy shares on the outcomes of different events, among which are political outcomes. The platform has faced scrutiny by the CFTC, but remains operational, as it maintains several important distinctions of its model – it limits the maximum money invested per participant, it offers the information it gathers for research purposes, and it has a limited selection of markets to begin with. Far more importantly, the platform is operated by the Victoria University of Wellington in New Zealand, which is a step away from the commercial entities behind other future contract platforms.
• Polymarket: Polymarket is a prediction market platform operating in the United States, which has faced increased scrutiny from the Commodity Futures Trading Commission (CFTC). The platform argues that its products are legitimate, though this is still subject to ongoing regulatory review. Known for its accurate predictions of electoral outcomes, Polymarket distinguishes itself by using cryptocurrency for transactions. In response to regulatory pressure, Polymarket has implemented measures such as restricting U.S.-based consumers from participating in certain markets.