Election Day is here, which means that prediction markets are about to receive a very large amount of “mentions” over the next 12 hours as media outlets relay political sentiment for the 2026 midterms. For today, November 3rd, legal news surrounding sports contracts will take a backseat to political coverage as Democrats and Republicans vie for control of the US Senate.
Political prediction markets may have come into their own in late 2024 during the US presidential election. But that was before media partnerships along with mainstream awareness fully kicked in. Individuals tuning in to all-day coverage of the midterm elections could read and hear the terms “prediction market,” “Kalshi,” and “Polymarket” more than a hundred times between now and the moment polls close.
So far, the only official warning issued to voters who might participate in prediction markets has come from the state of Wisconsin. In July of this year, the Wisconsin Elections Commission (WEC) notified voters in the state that they could face prosecution if they participate in an election that they traded on.
The Competitive Enterprise Institute (CEI) has filed suit against the state in an effort to shield voters from potentially having their midterm election votes nullified. However, a resolution to that case will not occur before the polls close tonight.
Separately, the Commodity Futures Trading Commission (CFTC) sued Wisconsin back in April. The federal agency claims it has “exclusive jurisdiction” over prediction markets, including those that involve political and sports outcomes. That specific lawsuit only applies to federal preemption and does not cover Wisconsin’s aim to restrict votes from individuals who trade on statewide election outcomes.
Minnesota’s criminal ban on prediction markets and their collaborators is likewise locked in a court battle, but the law doesn’t prosecute casual prediction market “takers” in any way. Its focus is solely on the apps, market makers, and affiliates.
Technically, political prediction markets are legal in all 50 states under the CFTC. Yet that legality has been challenged by numerous states, most of which focus on the “sports” contracts that exchanges offer. As of Election Day, Kalshi’s service is at least partially geo-restricted in the states of Nevada, Michigan, Washington, and Massachusetts.
Traders who are located within the above-mentioned states should check availability to ensure that the prediction market platform they’re accessing is allowing election-based trades for the midterms.
As pointed out on Election Day Eve by industry observer Dustin Gouker, “sports” event contracts will remain the most popular prediction market product going forward. While prediction platforms have certainly “upped their game” via Election Hub modules to accommodate an influx of new users, apps like Kalshi are attracting billions in trading volume during college football Saturdays.
Regardless of which party benefits the most from midterm election results, prediction markets (specifically, “sports” contracts) will remain a highly contentious issue heading into 2027 and beyond. Many legal experts believe that the United States Supreme Court will ultimately hear one or more prediction market cases in 2027 or 2028.
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