Instructions on Wagering in the United States' Presidential Election
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In a significant development, online election prediction markets have resumed operations in the United States, following a federal appeals court ruling that lifted a legal freeze on such contracts. One of the platforms, Kalshi, has announced plans to accept bets of up to $100 million on the 2024 congressional elections and the presidential race.
The legality of these markets has been a topic of debate, with concerns raised about their potential impact on the integrity of elections. Economics professor Koleman Strumpf, from Wake Forest University, discussed the issue, comparing the situation of political betting to sports betting. Strumpf noted that while billions of dollars were wagered on sports, it was all done illegally prior to a 2018 U.S. Supreme Court decision opening the door to legal wagering nationwide beyond just Nevada.
The U.S. Commodity Futures Trading Commission (CFTC) has been a key player in the regulatory landscape, expressing concerns that political betting could undermine the integrity of elections. However, platforms such as Polymarket have recently re-entered the US market after acquiring CFTC-licensed derivatives exchanges, enabling them to operate legally under federal regulatory frameworks.
These platforms offer trading on political events, including elections, within a regulated environment. Previously, experimental platforms like PredictIt operated under specific conditions, but recent agreements with the CFTC have lifted these caps, allowing more participants and higher maximum stakes.
The regulatory approach treats these platforms more as derivatives or event contracts markets rather than traditional sportsbook gambling, a distinction crucial to their legal operation under financial regulatory statutes rather than state gambling laws.
Larry Henry, a veteran print and broadcast reporter and editor with experience in states with gaming, including Tennessee and Louisiana, has been following the developments closely. Henry noted that a "yes" vote for Democrat Kamala Harris cost 53 cents per contract on the New Zealand-based market PredictIt by the end of the first week of October. In the U.S., betting on the Nov. 5 presidential election is not legal through regulated platforms like DraftKings and FanDuel.
Despite the regulatory clarity, online election prediction markets remain at the intersection of financial regulation and gambling law, creating ongoing compliance challenges and questions about health and ethical impacts. The CFTC is continuing to appeal against the resumption of political betting, reflecting the dynamic and evolving nature of the regulatory environment.
According to Strumpf, a better solution would be to "put it above board and legalize it and regulate it." This approach, he believes, would provide a controlled environment for these markets, ensuring consumer protection and market integrity.
[1] Polymarket: https://polymarket.com/ [2] PredictIt: https://www.predictit.org/ [3] CFTC: https://www.cftc.gov/ [4] QCX/QCEX: https://www.qcx.com/ [5] DOJ: https://www.justice.gov/
- In the midst of renewed activity, online platforms like Polymarket are now legally accepting bets on the 2024 elections, having obtained CFTC-licensed derivatives exchanges.
2.platforms such as PredictIt, offer trading on political events within a regulated environment, and have recently expanded their participant limit and maximum stakes due to agreements with the CFTC.
- Economics professor Koleman Strumpf advocates for the legalization and regulation of political betting, suggesting it would create a controlled environment, ensuring consumer protection and market integrity.
- Though online election prediction markets operate under financial regulatory statutes rather than state gambling laws, they still face ongoing compliance challenges and questions about health and ethical impacts, as the CFTC continues to appeal against their resumption.
