Political betting could soon be legal – and that’s the last thing this election needs

As if the US election wasn’t already poisoned by money, there may soon be another way for people to throw their money into the process. Late last week, a federal judge cleared the way for Kalshi, a startup exchange dedicated to “trading on the outcome of future events,” to take bets over which political party will control the House of Representatives and the Senate after the November elections. Shortly after, electronic brokerage Interactive Brokers announced that it would also allow its 3 million clients to bet on whether Vice President Kamala Harris or former President Donald Trump will win the White House this fall.

All of these developments together finally provided an answer to the question of how the political climate in this country could become even more tense and toxic: by allowing people to unlock their phones, open an app and bet their entire savings on it.

A federal appeals court quickly stepped in to give the Commodity Futures Trading Commission (CFTC), the agency that had sought to block Kalshi from offering election bets, a chance to argue its case on appeal. Kalshi temporarily paused trading in his election-related futures contracts, albeit after at least 50,000 had been transacted during the hours the market was live.

But the up-to-date online status of any given broker is less important than the direction the market is currently headed: People looking to make money have watched legalized sports betting rake in billions of dollars for six years, and they’re also pushing to legalize election betting. At this point, it seems the more pressing question is not whether they’ll succeed, but whether they’ll do it in time to accept bets on the game that’s about six weeks away.

BETTING ON DEMOCRACY

Anyone who has watched gambling consume the sports media understands how seedy and dystopian it can become if left unregulated: As sports betting becomes increasingly integrated into live broadcasts, it’s not hard to imagine election night coverage featuring updated odds after every prediction and free-bet promo codes during every commercial break. But betting on how a ball will bounce on a given Sunday afternoon is, at a very basic level, betting on a relatively minor form of entertainment. It’s different in nature from betting on, say, whether the government will soon ban abortion care nationwide or implement a brutal, expanded deportation program by this time next year.

Commercializing the future of an already fragile democracy doesn’t help anyone make informed decisions about who to vote for or how to participate more responsibly. It just means that books make money, and voters who are angry because their candidate lost may also be poorer because their bet lost, too.

For the uninitiated, election betting on sites like PredictIt works like this: You pay between 1 cent and 99 cents (dynamic prices that roughly correlate with the market’s perception of probability) for “stakes” in possible outcomes of future events. When these markets “resolve”—when the event happens—those who correctly predicted get $1 per share and those who didn’t get nothing. For example, if you buy 1,000 shares of Harris to win the 2024 election at $0.57 each, and she does win, your $570 investment would turn into $1,000. If you’d had the foresight to buy back those same shares on June 25, when President Joe Biden was still the nominee and Harris was trading for just 3 cents a share, congratulations—your winnings would allow you to buy a new iPhone for the price of the case.

Political betting is generally illegal in the US, but as is usually the case when there’s money to be made for suckers willing to forgo it, the market has come up with a few workarounds. The CFTC has allowed PredictIt, a New Zealand-based, university-affiliated nonprofit, to operate in the US on a limited basis, ostensibly for the purpose of collecting data for academic research. Users on Polymarket, a crypto-based exchange that lets people bet on everything from Fed rate cuts to whether Diddy will leave the country by October, have, at the time of writing, wagered nearly $1 billion on the 2024 presidential election. Officially, Polymarket has been blocked in the US since 2022 under the terms of a CFTC settlement, but for would-be gamblers with VPN access, it’s not particularly difficult to find step-by-step instructions on how to get around it.

A SPORTING OPPORTUNITY

There are technical differences between these sites and sportsbooks, but the outlines are largely the same. Like sports betting, buying futures contracts involves spending money on the outcome of upcoming events. Like sports betting, the odds move with the market. And like sports betting, the house takes a cut: PredictIt, for example, charges a 10% commission on winnings and 5% for processing withdrawals. The only meaningful difference is the real-world outcome you can cash out on: whether the Bengals-Chiefs game goes over the limit, or whether Trump gets to stoke his racist pogroms from the comfort of the Oval Office.

Advocates of legalization often cite the perceived value of the data these markets can provide, especially given the challenges associated with traditional polling. They argue that sites like PredictIt generate more accurate insights into public opinion by requiring participants to take a financial stake in the outcome. Others see election betting as a tool for institutions (or even individuals) to hedge against the possibility of an unfriendly political climate in the not-so-distant future. For example, if you’re an importer of Chinese-made goods facing the possibility of devastating tariffs under a Trump administration, buying stock in a Trump victory as a slight underdog could offset those losses if he does win in November.

I am, to put it mildly, skeptical of these claims, which sound an awful lot like after-the-fact justifications for a tried-and-true business model that makes the people who run it very, very rich. A recent Wall Street Journal feature on Polymarket quotes one user as saying that in his experience, traders on the platform tend to lean to the right. For all the problems with polls, it’s not clear that the rent-seeking behavior of a small group of aggressive online crypto bros is going to generate any better insights into the preferences of regular folks who, bless them, have never heard of PredictIt. And for every smart guy who manages to find an inefficiency to exploit, there are going to be a lot more casuals betting on elections like soccer fans at the start of a new season—bets born not from a sober, impartial analysis of the odds, but from their most fervent hope, however unrealistic, that their team will beat them and take home the Lombardi Trophy.

TRUTH SOCIAL, PART TWO?

You need look no further than the ongoing Truth Social debacle to see how the damaging effects of die-hard fandom can skew the action. In recent months, Trump supporters have been eagerly buying up shares of Trump Media & Technology Group, which owns the conservative social media network Truth Social, as a way to further rally behind and/or line the pockets of their favored candidate, who himself owns over 100 million shares. Unfortunately for them, the stock price has largely reflected Trump’s fortunes on the campaign trail, meaning it’s been in freefall in recent months. In March, when Trump effectively clinched the GOP nomination, Trump Media & Technology Group (which trades as DJT) hit $60 a share; following last week’s disastrous debate performance, it’s now around $14.

People who have in some cases blown their entire life savings into DJT stock aren’t acting at the behest of a licensed broker urging them to invest in a blue-chip company with a promising growth outlook. They’re buying DJT stock because the politician whose initials provided the ticker symbol is urging them to do so. And since Trump’s officially stated position is that he can only lose the election if his enemies rig it against him, enabling people to invest in his candidacy, both financially and emotionally, amounts to reducing an already short fuse to essentially nothing.

Consider recent history: Republican conspiracy theories about voter fraud have already forced election officials into hiding. Angry Trump supporters felt justified in storming the Capitol to stop the certification of a presidential election they knew was illegitimate and stolen. If you both voted for Trump and bet big on his Electoral College victory, how much angrier would you be if he lost? How much more susceptible would you be to the idea that he and both of you have been cheated out of what is rightfully his and yours? And how likely would you be to conclude that, between the otherwise inevitable death of the republic under President Harris and the now zero balance in your savings account, you can and should do whatever it takes to get back what’s yours?

To be clear, I do not believe that Trump’s eventual departure from American politics will make mainstream political betting a good idea. Regardless of who the participants are, watching presidential debates is painful enough without a formal version of Pat McAfee livestreaming the proceedings on Twitch, urging viewers to buy stocks at a good price before the moderator moves on to the next question. But the vicious tribalism that fuels Trump’s movement illustrates the glaringly obvious dangers that lie ahead. Whether in 2025 or beyond, the potential for political violence in this country is already alarmingly high. Giving people the means to try to profit from it is not going to help.