Election officials warn of risks as betting markets surge ahead of midterms

Midterm races draw prediction market money as election chiefs sound alarm

Jared DeMarinis runs elections for the state of Maryland. When prediction markets started pricing his state's congressional races this cycle, he did not reach for the phone to congratulate anyone on the new liquidity. He called it a troubling trend.

He is not alone. Election administrators across multiple states have begun treating prediction market odds as a governance problem, not a financial innovation. Their concern is specific: that pervasive financial incentives tied to electoral outcomes will erode confidence in results before a single ballot is counted.

This is worth taking seriously on its own terms, separate from the legal battles over tribal gaming and CFTC authority that have dominated this space for months. The election integrity question operates on different terrain. It does not require Kalshi or Polymarket to lose in court. It only requires enough voters to believe that someone, somewhere, is trading the outcome they are about to produce.

The mechanism the administrators fear is not manipulation in the legal sense. Markets with genuine depth resist manipulation — traders who price an outcome incorrectly get corrected by traders who profit from getting it right. Kalshi's own research shows its markets calibrate well: contracts priced at sixty cents resolve at roughly that rate. Columbia Law's Joshua Mitts makes the parallel to equities explicit. The stock market reprices on election news constantly, and nobody treats that as interference.

But Mitts's analogy only holds if the public understands it. The stock market's connection to elections is mediated through earnings forecasts and interest rate expectations — abstractions that most people do not see as a mechanism for controlling outcomes. A prediction market that quotes a named Senate candidate at eighty-three cents is legible to anyone who has ever placed a bet. The fear is not that the market is wrong. The fear is that people will believe the market is being moved by someone who knows something they shouldn't, or wants to move it for reasons that have nothing to do with reading the race accurately.

Kalshi disclosed in August that it suspended a North Carolina congressional candidate for trading on her own race. The platform has insider trading rules. The disclosure was, in one reading, evidence that the system works. In another, it confirmed that the risk is real enough to require policing.

The consensus read in political markets right now is that this is a peripheral issue — something regulators mention but cannot easily quantify, and therefore something the industry can manage with disclosure requirements and trading restrictions. The consensus may be right. But the administrators raising these concerns are not fringe voices. They are the officials who have spent years managing the gap between what elections actually are and what large portions of the public believe them to be. They have earned the right to define what counts as a new stress on that system.