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

(AP) — Election-season trading on prediction markets, including in this fall’s biggest races, is skyrocketing while states fight to outlaw the platforms as unlicensed casinos and begin to worry about how high-stakes odds will affect American democracy in unpredictable ways. Already this year, prediction market odds have gotten tangled up with real-life elections, and it is quickly becoming a hot topic for election administrators, who for years have battled misinformation and conspiracy theories. Their concerns are broad, but many revolve around the fear that pervasive financial incentives will further damage confidence in elections and democracy if Americans think they are influencing the outcome.

“This is a troubling trend that election administrators across the nation must deal with,” said Jared DeMarinis, the administrator for the Maryland State Board of Elections. Polymarket, Kalshi and other prediction markets allow participants to buy and sell contracts tied to the probable outcome of an event. The contracts are typically priced between 1 and 99 cents, and customers can trade on everything including races for mayor, governor and U.S.

The explosion in prediction market trading comes as President Donald Trump has pressed sweeping changes to voter identification and voting by mail procedures to address what he falsely claims is rampant fraud in mail voting and widespread voting by noncitizens. Stock market is seen as an example of hedging election risk Kalshi and Polymarket officials, for their part, contend that the activity is neither gambling nor a danger to elections or democracy. It is, they say, barely different from people who trade stocks, bonds or commodities ahead of an election to protect themselves against how the eventual winner’s policies might affect their investments or business.

“One can make the argument that the entire stock market, at some level, is affected by elections and outcomes,” said Joshua Mitts, a Columbia Law School professor who researches corporate and securities law. Kalshi and Polymarket officials say they have insider trading protections, required by federal law, that are meant to prevent, for instance, candidates and their campaign staffers from trading on their own races. 31, Kalshi disclosed that it gave a three-year suspension and fine to a North Carol…

Senate.The explosion in prediction market trading comes as President Donald Trump has pressed sweeping changes to voter identification and voting by mail procedures to address what he falsely claims is rampant fraud in mail voting and widespread voting by noncitizens.Stock market is seen as an example of hedging election riskKalshi and Polymarket officials, for their part, contend that the activity is neither gambling nor a danger to elections or democracy.It is, they say, barely different from people who trade stocks, bonds or commodities ahead of an election to protect themselves against how the eventual winner's policies might affect their investments or business. Some independent analysts agree.“One can make the argument that the entire stock market, at some level, is affected by elections and outcomes,” said Joshua Mitts, a Columbia Law School professor who researches corporate and securities law.Kalshi and Polymarket officials say they have insider trading protections, required by federal law, that are meant to prevent, for instance, candidates and their campaign staffers from trading on their own races.