Fort Wayne, Indiana – As the 2026 midterm elections approach, prediction‑market platforms Kalshi and Polymarket are seeing millions of dollars wagered on political outcomes. State officials across the country argue these contracts violate state gambling laws, while the Trump administration backs the industry.
State lawsuits and warnings
Officials in Minnesota, Maryland, and other states contend that betting on elections is illegal under state statutes. Minnesota Rep. Emma Greenman, a Democrat, warned that the platforms “jeopardize people’s trust in government and elections.” Maryland’s election administrator Jared DeMarinis cautioned that the industry could expand before the 2028 presidential race, calling the moment a “watershed.”
Federal stance
The Commodity Futures Trading Commission (CFTC), under Chairman Michael Selig—appointed by President Trump in 2025—maintains that prediction markets fall under federal jurisdiction as commodity derivatives. In a recent news release, Selig said, “These products are squarely within the CFTC’s regulatory remit under the Commodity Exchange Act.” The agency has proposed rules that would explicitly define election‑related contracts as swaps, keeping them under federal oversight.
Industry perspective
Kalshi and Polymarket argue their contracts are akin to financial swaps used for risk management, not gambling. Kalshi’s attorneys filed a March court brief asserting that political outcomes can have direct financial consequences, justifying federal regulation. Polymarket emphasized that the CFTC regulates its markets, not a patchwork of state rules.
Critics and watchdog concerns
Consumer‑protection groups, including Better Markets, Common Cause, and Citizens for Responsibility and Ethics, have urged the CFTC to ban election‑related contracts, warning that financial incentives could encourage interference and erode public confidence. A July 27 letter from 16 watchdog organizations called the practice “illegal under many state laws” and a threat to democracy.
Legal battles continue
In Minnesota, a near‑total ban on prediction markets was blocked by a federal judge after lawsuits from the CFTC and the platforms. Nationwide, 23 states completely prohibit betting on elections, according to data from the National Conference of State Legislatures and the Pew Research Center. The clash between state enforcement actions and the Trump administration’s federal approach is expected to shape the future of election‑related financial products.
Original reporting: WOWO News/Talk (Fort Wayne) — read the source article.
