US Election Prediction Markets Expand Despite Legal and Regulatory Hurdles

American election bettors now have more options than ever, with a growing array of apps and websites offering daily opportunities to wager on the next president, and more, as the landscape for political betting continues to broaden. The latest indication of the rising interest in US election wagering, and the push by various platforms to cater to this demand, came this week with PredictIt’s announcement of “significant updates” to its platform.

US Election Betting Continues to Rise in Popularity

Predictit is one of the companies leading the way into this new form of betting. The Commodity Futures Trading Commission (CFTC) and PredictIt had been locked in a legal battle over the status of a “no-action” letter issued by the regulator in 2014, which had allowed PredictIt to operate as an “experimental” platform for US election betting. In June, however, both parties announced they had reached an agreement in principle to settle the dispute, clearing the way for PredictIt’s expansion. Among the key changes is the removal of the 5,000-trader limit on event contracts. This means there’s now no cap on the number of participants who can buy shares in “yes” or “no” outcomes on any given political event.

PredictIt has also raised the maximum stake per contract from $850 to $3,500, which is the same as the federal individual contribution limit for political campaigns. John Aristotle Phillips, co-creator of PredictIt, has said that just as some individuals are passionate about sports, theater, or entertainment, many others feel a deep connection to politics. 

Others Are Chiming In on the Race

Kalshi and other prediction markets introduced event contracts linked to last year’s presidential election, which attracted significant interest and generated hundreds of millions of dollars in trading volume. Since then, these platforms have expanded into a growing range of topics, including sports. Although the introduction of sports-related event contracts has sparked considerable controversy since their debut late last year, political betting markets have also seen rapid growth.

As a result, wagering on US politics has become a year-round activity, no longer limited to the outcomes of elections held every two or four years. Kalshi, for instance, currently offers a range of political markets, including predictions on which bills will be signed into law this year and whether Donald Trump will establish a national bitcoin reserve.

Of course, this rapidly growing trend has caught the eyes of some who may not be as enthusiastic about the trend. For example, multiple US regulators overseeing online sports betting have attempted to block Kalshi and other platforms from offering sports-related event contracts, arguing that such products constitute straightforward gambling. Kalshi has pushed back through legal challenges and, so far, has prevailed enough in court to keep trading on those contracts ongoing.

Despite that, prediction markets are rapidly evolving into platforms for wagering on far more than just political outcomes.