State-level gaming regulators, legislators, and attorneys general across the U.S. have been clarifying their positions on the legality of prediction markets like Kalshi and Polymarket in recent months. A potential new challenge for these markets could come from elections departments.
A report this week from Maryland Matters highlights concerns expressed by Maryland Elections Administrator Jared DeMarinis regarding markets based on election outcomes. DeMarinis regards the act of monetarily betting on elections as fundamentally a wager. "To me, they are making a wager. They are making a bet," DeMarinis stated. He continued by emphasizing that when individuals put money in a prediction market to forecast whether a candidate will win or lose, they are indeed engaging in a form of betting.
This perspective aligns closely with an April executive order issued by Maryland Governor Wes Moore. Following allegations against an Army soldier for using classified information for personal gain concerning military operations in Venezuela, Moore prohibited state employees from utilizing nonpublic information for financial advantage, particularly through prediction markets. His order noted the risks posed by the emergence of prediction markets, allowing people to gamble on specific outcomes and potentially exploit their government positions for personal enrichment.
In 2026, Maryland legislators did not join the ranks of 15 other states that sought to legislate on prediction markets. However, similar to those states, election betting remains illegal in Maryland, a fact DeMarinis acknowledges. "Whether or not I go after the prediction markets — I don’t know," he remarked, indicating ongoing consideration on the issue. He later reinforced his position in remarks to ABC News about election betting, stating, "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. This is going to be a growing issue, and something that we need to stop in its infancy."
The discussion surrounding election betting has coincided with a resurgence in prediction markets. A significant lawsuit surrounding the legality of providing election markets ignited this new interest. Kalshi, a major player in the prediction market space, achieved a court victory over the CFTC, which allowed the company to reintroduce election-based markets after being previously halted. The crux of the issue arose when Kalshi sought to create markets focused on which political party would control Congress post-election.
A federal appeals court ruled that the CFTC did not provide sufficient evidence to support concerns expressed by its former chair regarding the potential regulation of prediction markets on political outcomes as making the CFTC an "election cop." The court acknowledged the importance of maintaining electoral integrity and the need to prevent misinformation, yet asserted that the regulator failed to present a foundational basis for the risks posed by event contracts.
Since Donald Trump's reelection in November 2024, the CFTC's stance on prediction markets has shifted dramatically, moving from opposition to actively supporting event contracts targeting political and sports outcomes, as evidenced by recent lawsuits promoting these markets across the U.S.
