As voters cast ballots in this election, some Americans are betting. Here’s what you need to know

CNN
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While bettors outside the US have long been able to place bets on who will win the White House, in a historic shift this election cycle Americans can make their own political bets.

more than 100 million dollars in election betting have been traded at Kalshia federally regulated prediction market that got the green light to offer election betting after a federal appeals court in Washington, DC, this month upheld a lower court’s ruling that cleared the way for legal political gambling. Other platforms in the US have started offering election-related betting in the wake of the ruling.

The electoral markets have not gone unnoticed by the Republican Party’s presidential candidate, Donald Trump, who has called out his odds on social media and at campaign events.

“You can see we’re up in the polls pretty significantly. They have a new thing, a new phenomenon, and that’s gambling polls,” the former president said. at a stop in Michigan on October 18. “I don’t know what the hell that means, but it means we’re doing pretty good.”

The final nationwide CNN poll before votes are counted showed Trump and his Democratic rival, Vice President Kamala Harris, in a deadlocked race for the White House.

While the platforms have marketed their odds as election forecasts and claim they allow their users to hedge their bets on different outcomes, the Commodity Futures Trading Commission, which tried to block Kalshi’s political contracts, has warned they could tarnish the public’s perception of the democratic process.

With more than 50 million ballots already cast ahead of Tuesday’s election, here’s what you need to know about election betting in the United States.

Kalshi launched his offers – which range from which party will control the House and Senate in 2025 to who will sit in the Oval Office — earlier this month after a three-judge panel of the D.C. Circuit Court of Appeals found that the agency had not demonstrated how it or the public “will be irreparably harmed” while the appeal plays out.

The CFTC had appealed a lower court ruling that found Kalshi’s contracts did not involve “unlawful activity or gaming.” While the appeals court ruling allows Kalshi to offer election bets, it also gives the agency a chance to pause the decision should more concrete evidence of irreparable harm develop.

Meanwhile, the court granted the CFTC’s request to expedite the case and could hear oral arguments on the case in the coming months.

Robinhood, a popular stock trading app, launched betting on the presidential election on Monday. PredictIt, another prediction market embroiled in a legal battle with the CFTC, is also offering option contracts while the case is pending.

Not all prediction markets are available in the US. Polymarket, an offshore, unregulated crypto-based prediction market, is blocking US users due to a 2022 settlement with the CFTC.

David G. Schwartz, a gaming historian at the University of Nevada, Las Vegas, told CNN that for much of the country’s history, Americans gambled their picks in markets largely centered in New York City. Political betting, he said, traces its roots to informal, “player-to-player” betting. “Betting on elections was an offshoot of that. It was never sanctioned by the state,” Schwartz said.

According to economic historians Paul Rhode and Koleman Strumpf, who have studied the history of political betting markets, Americans placed election betting on Wall Street as far back as the 1880s, when formal political betting markets appear to have “largely disappeared by 1944.” These odds were published in newspapers, Rhode and Strumpf note.

Since the first half of the 20th century, political gambling has been considered illegal in the United States due to various state laws and state court decisions. Some states, such as Nevada, Texas, Michiganexpressly prohibit this practice.

However, researchers have long studied political prediction markets.

The University of Iowa has operated the Iowa Electronic Markets, which offer contracts on the outcomes of political events, since the late 1980s for research purposes. PredictIt was launched in collaboration with Victoria University of Wellington in New Zealand.

Because Kalshi is a federally regulated market, its political bets are protected under state laws that have separate rules for business transactions and commodity trading.

Not everyone is allowed to make a political bet on the platform. Available only to US residents, Kalshi prohibits candidates, campaign workers, pollsters and decision desk staff at major media organizations, among others, from making political bets.

Some states have additional measures regulating election betting.

In Wisconsin, anyone who has “made or become interested, directly or indirectly, in any wager or wager depending on the result of the election” is not allowed to cast a vote. If they do, their vote could be challenged, a state election commission spokesman told CNN.

While its legal dispute with Kalshi plays out, the CFTC has begun a broader crackdown on event-based betting: It proposed a rule earlier this year that would explicitly ban contracts on the outcome of elections, awards shows, sports and other events. If the agency were to finalize this rulemaking, it is likely that the prediction markets would have to sue the agency again for offering political bets.

Meanwhile, in the weeks since the launch of its congressional contracts, Kalshi has added more markets, allowing its users to bet on the margin of victory in battleground states like Wisconsin or Pennsylvania, or on whether the tech billionaire Elon Musk will be nominated for a cabinet seat.

For Cantrell Dumas, the director of derivatives policy at Better Markets, a non-profit organization that advocates for financial reform, it is not possible to hedge business interests on these contracts. He says it underscores what his organization has argued: that Kalshi’s markets were not for hedging in the first place, but for gambling.

“The longer we wait, the more truth is revealed, right? No company can uncover whether Kamala Harris loses by three points or not, or whether Donald Trump wins by two points,” Dumas said.