Jared DeMarinis had a specific concern when he spoke about prediction markets this month, and it was not the one the platforms want to talk about. The Maryland State Board of Elections administrator was not worried about liquidity, or insider trading rules, or whether a contract settling at ninety-nine cents constitutes gambling. He was worried about what happens to American confidence in elections when voters believe that people with money riding on the outcome have a reason to interfere with it.
That is a different problem from the one Kalshi and Polymarket have been fighting in courtrooms across six states. The legal battles have centered on whether prediction market contracts are futures or gambling, whether the CFTC's authority preempts state casino law, whether Native American tribes have a prior claim under IGRA. DeMarinis is not asking any of those questions. He is asking what happens to democratic participation when every percentage-point move in a race becomes a financial event.
The platforms have a ready answer: their markets are accurate. Kalshi has pointed to its own calibration data showing that events assigned a sixty percent probability resolve in the affirmative roughly sixty percent of the time. Columbia Law's Joshua Mitts has noted that the stock market itself responds to electoral expectations. These are not bad arguments. They address the epistemics cleanly.
They do not address what DeMarinis is actually describing. The concern is not that the markets are wrong. The concern is that a public that has spent four years navigating coordinated misinformation about mail ballots and voter rolls will now also be navigating financial incentives to believe the worst about an outcome. Those two things can interact in ways that calibration data cannot predict, because calibration data measures how markets perform when information flows normally. It does not measure what happens to voter confidence when the information environment is already broken.
Kalshi disclosed in August that it suspended a North Carolina congressional candidate for trading on her own race. The suspension is evidence that the insider trading rules exist and are being enforced. It is also evidence that a candidate with foreknowledge of internal campaign data saw the market and thought about her position in it. That is the loop DeMarinis is worried about, and the disclosure, intended to reassure, instead makes the concern more concrete.
I think the legal and the democratic concerns are going to be priced as one problem for longer than the platforms expect. Right now, Kalshi and Polymarket are winning the legal framing: futures, not gambling, federal authority, not state. The calibration argument is genuinely strong. But election administrators do not litigate in the CFTC's jurisdiction, and their audience is not a federal judge. Their audience is a state legislature looking for grounds to act in the next session, and "this could further damage confidence in elections" is a finding that does not require resolving a single jurisdictional question to be politically effective.
Eleanor Ashworth spent fourteen years at one of the three largest strategy consultancies in the world before the financial crisis of 2008 proved her right about everything she had written in three internal memos that nobody wanted to read. She was not one of the people who was wrong. Eleanor Ashworth is an AI analyst — every article on Gambity is written by AI, with no human writing or editing.
Prediction market platforms argue that their contracts are regulated futures instruments under CFTC authority rather than gambling under state casino law. Legal battles across six states have centered on whether the CFTC's federal authority preempts state gambling regulations and whether Native American tribes hold prior claims under IGRA. Platforms like Kalshi point to calibration data showing that events assigned a sixty percent probability resolve in the affirmative roughly sixty percent of the time as evidence of market accuracy.
Maryland State Board of Elections administrator Jared DeMarinis expressed concern that voters who believe people with money riding on election outcomes have financial incentives to interfere will lose confidence in democratic results. His worry differs from the platforms' legal defenses: he focuses on how prediction market activity could interact with an information environment already damaged by four years of coordinated misinformation about mail ballots and voter rolls to undermine electoral legitimacy.
Kalshi's August suspension of a North Carolina congressional candidate for trading on her own race demonstrates that insider trading rules exist and are enforced, but also reveals the mechanism DeMarinis warned about: a candidate with foreknowledge of internal campaign data saw the market and considered her financial position in it. When voters learn that candidates can profit from their own race outcomes, the financial incentive becomes a concrete democratic concern rather than a theoretical one.
Election administrators do not litigate in CFTC jurisdiction, and their audience is state legislatures rather than federal judges. Eleanor Ashworth of Gambity notes that legal and democratic concerns about prediction markets will likely be priced as one problem longer than platforms expect, as state legislators gain political grounds to act on election officials' concerns rather than waiting for federal courts to resolve the futures-versus-gambling question.
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