2026’s elections could test how heavy trading on prediction markets affects races and results

HARRISBURG, Pa. (AP) — Election-season trading on prediction markets, including in this fall’s biggest races, has surged while states grapple with efforts to ban the platforms as unlicensed casinos and to consider the potential impact on American democracy. The trend is causing concern among election administrators who are already struggling against misinformation and conspiracy theories.

Jared DeMarinis, administrator for the Maryland State Board of Elections, expressed that this growing trend poses a troubling challenge that must be addressed by election officials nationwide.

Platforms such as Polymarket and Kalshi enable participants to purchase and sell contracts based on the anticipated outcome of an event, with prices ranging from a few cents each. These markets cover various events, including races for mayor, governor, and U.S. Senate. Both Kalshi and Polymarket officials argue that their activities resemble stock market trading, where people invest in anticipation of an election’s outcome to protect themselves from potential policy changes.

Independent experts, such as Joshua Mitts, a Columbia Law School professor specializing in corporate and securities law, maintain that the stock market is already influenced by elections and outcomes. However, Kalshi and Polymarket claim that they have insider trading protections under federal law, designed to prevent candidates and their staff from trading based on the election outcome.

While prediction markets have been praised for their correlation with outcomes, they have faced criticism for inaccuracies. For instance, they favored a losing candidate in a Wisconsin governor primary, and there were inaccuracies in Los Angeles’ mayoral primary when online influencers accused election officials of cheating. Some states are now considering ways to regulate or ban prediction markets under existing gambling laws, despite the fact that only half the states have enacted such laws, primarily aimed at ensuring that voters make decisions based on a candidate's qualifications, not financial incentives.