'Canary in the coal mine': States threaten crackdown on election betting

A handful of states currently have election betting restrictions.

On prediction markets like Kalshi and Polymarket , bettors can put money on dozens of election-related bets in Maryland, from the winner of the upcoming gubernatorial race to the margin of victory in the state's 6th Congressional District.

For most Americans, the Maryland elections are fair game -- races in the state are already generating hundreds of thousands of dollars in trading volume on the major prediction markets. But not for residents of Maryland, which is one of a handful of states that ban election betting. And Jared DeMaranis, the state's election administrator, plans to enforce it.

"If we have credible information about illegalities and it's not within our civil citation authorities, we will of course refer those matters to the office of the state prosecutor for enforcement," DeMaranis told ABC News. "This is going to be a growing issue and something that we need to stop in its infancy."

Federal regulators and the courts have given Americans the green light to wager on elections, prompting a frenzy of wagering on the outcomes of races, the likelihood of candidates dropping out, the amount of voter turnout, and more. But more than half of U.S. states have existing laws on the books that limit or restrict the practice, according to research from the Pew Research Center -- and now state leaders are sorting out how exactly to enforce those rules.

Maryland, Texas and Arizona are among those states with laws explicitly banning election betting. And in Wisconsin, residents cannot cast ballots in elections in which they have placed a "bet or wager depending upon the result of the election," according to state law.

Ann Jacobs, the chair of the Wisconsin Election Commission, said Wisconsinites who bet on an election and then vote in it could have their vote challenged or face voter fraud charges. Jacobs acknowledged that it would be a difficult rule to enforce, but stood by the spirit of the law.

"The policy behind saying, 'You can bet or you can vote, but you can't do both,' is 100% a sound policy," Jacobs said. "We want people to vote based on their belief that the person they are voting for is going to be the best for their community ... it just makes sense."

Arizona officials have focused their efforts on the platforms themselves. The state's attorney general filed criminal charges against Kalshi earlier this year claiming the platform operated an illegal, unlicensed gambling business and accepted unlawful wagers from Arizona residents.

In April, a federal judge blocked Arizona from continuing its criminal case. The injunction followed a lawsuit against the state by the Commodity Futures Trading Commission -- the federal regulator overseeing prediction markets -- which argued that prediction markets fall under federal oversight rather than state gambling regulations.

The Arizona attorney general's office declined to comment on the active case or how it will address potential election betting this season.

Officials in Texas, another state with a law banning election betting, did not respond to inquiries from ABC News. But Christopher McGinn, the executive director of the Texas Association of County Election Officials, said he and other administrators are engaged in early discussions about how to handle prediction markets, particularly the likelihood that individuals with a financial stake in the outcome of an election may have "more incentive to attempt to manipulate [elections], or spread misinformation."

Prediction market advocates believe election-related event contracts strengthen political forecasting and can predict outcomes with greater accuracy than traditional polls. But many election experts warn that election wagering could threaten to compromise the integrity of elections or incentivize offenders to profit from insider information.

"I can't think of all of the ways that people might try to make money off of election outcomes, but I'm sure there are enterprising people who will come up with all kinds of things," said Rick Hasen, an expert in election law at the University of California-Los Angeles. "We don't want to start thinking of elections as a financial incentive. The potential for manipulation is too great."

Legalized election betting in the U.S. is a new phenomenon. In 2024, Kalshi prevailed in a lawsuit that allowed it to offer event contracts for politics and elections. More recently, the Commodity Futures Trading Commission proposed new rules that classified elections "as contests, not gaming," further clearing the way for platforms to offer election-related wagers.

Those developments present state officials with a challenge: How can they enforce state-level bans on election betting without support from federal regulators or the platforms themselves? The answer for some, including Maryland, is to pursue the individuals.

"Right now, it's on the person. The person that places the wager on the platform is doing the illegality," said DeMaranis, the Maryland elections chief, adding that lawmakers will eventually "need to clarify the role of those platforms to make sure they're liable for offering monetary incentives on elections."

Matthew Wein, a former Homeland Security official, said a similar dynamic emerged with social media giants over the past decade. In the absence of a crackdown on platforms, authorities were left to pursue users "for doing things they shouldn't have been doing on the platforms, but not against the platforms themselves."

"And this seems to be heading in the same direction with prediction markets," said Wein, who now authors a gambling newsletter called "Secure Stakes."

A Polymarket spokesperson said states with election betting bans "run counter to the established framework for regulating prediction markets."

"We look forward to addressing these claims through the appropriate legal process," the spokesperson said.

A Kalshi spokesperson said the company's services are "federally regulated and have stock-market-grade systems for identifying and addressing market manipulation."

Meanwhile, in Washington, D.C., lawmakers continue to scrutinize prediction market platforms. Rep. Jamie Raskin, D-Md., and Sen. Jeff Merkley, D-Ore., have introduced legislation that would prohibit event contracts on election outcomes, which they said "spreads civic cynicism and distrust in our democratic institutions."

DeMaranis said he has struggled to instill a sense of urgency among the nation's election officials, many of whom he said have never heard of prediction markets.

The effort, he said, has left him feeling like the "canary in the coal mine."

"It's about the integrity and public trust of the electoral process," DeMaranis said. "When you have people that are engaging in election-related wagering, the integrity of the entire process now comes into question."

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