Political Betting Markets Face Challenges Despite Popularity

A majority of the US states currently offer legal sports betting. The activity’s popularity soared in recent years but alongside wagering on sports, many gamblers demonstrated interest in placing bets on future events outside of sports.

Ahead of the upcoming Presidential Elections in the country, Kalshi, a company that acts as a regulated exchange and prediction market on the outcome of future real-world events, sought to deliver its services. Not unexpectedly, the “contracts” on political events are popular in light of the upcoming Election, yet, for the moment, election betting is on hold.

Legal Betting on Political Events Remains on Hold

Last month, Kalshi secured a win in its battle with the Commodity Futures Trading Commission (CFTC). The victory came after a ruling from Judge Jia Cobb, who sided with Kalshi, effectively permitting the company to offer its “contracts” on political events.

However, this was a short-lived victory, considering that the CFTC appealed the decision to the Court of Appeals for the District of Columbia Circuit. Subsequently, after it was allowed to accept bets for several hours, Kalshi was once again obstructed from offering its services legally in the US due to a temporary freeze order issued by the Court of Appeals.

While customers in the US cannot legally engage in political betting, Kalshi offers its political contracts to other parts of the globe. Among the trending contracts are topics such as “How many presidential debates this year?”, “The President’s 538 approval rating today?”, “How high will the President’s 538 approval rating get by end of month,” among other hot topics.

But it’s not only Kalshi that offers wagering on the outcome of political events. A recent report by Barron’s suggested that the bets on this year’s US Presidential Election on Polymarket were close to $1 billion. The same report added that this figure doesn’t include more money bet on the outcome of other political events.

Are Political Event Bets Dangerous?

For the moment, the fate of political betting in the US remains in the hands of the Court of Appeals. During the battle between the CFTC and Kalshi, the former argued that political bets can undermine public opinion.

Moreover, the CFTC argued that certain individuals may try to manipulate public opinion through such wagers to gain an unfair advantage for one political figure or smear another. Those concerns are not unfounded, especially considering the massive political betting-related scandal from the UK from earlier this year. In the scandal, two dozen politicians, police officers and other politically exposed individuals fell under scrutiny over alleged insider information trading related to bets placed on the date of the country’s elections.