State gaming regulators, legislators, and attorneys general across the United States have been increasingly vocal about their positions regarding the legality of prediction markets, exemplified by platforms like Kalshi and Polymarket. A new entity may be poised to challenge these markets: elections departments.
Maryland Elections Administrator Jared DeMarinis recently expressed his concerns about markets based on election outcomes. He characterized investments in these prediction markets as wagers, stating, "To me, they are making a wager. They are making a bet. Putting money in the prediction market, saying a candidate is likely to win or lose the election, is making a wager."
DeMarinis's stance aligns with an April executive order from Maryland Governor Wes Moore, which arose after an Army soldier was charged with allegedly using classified information relating to military movements against Venezuelan President Nicolás Maduro. This order prohibits state employees from using insider information for personal financial gain through prediction markets. The order highlights the potential for state employees to exploit their government positions for personal enrichment through betting on real-world events.
While legislators in Maryland did not join the 15 other states that introduced prediction market legislation in 2026, DeMarinis noted that betting on elections remains illegal in the state. He commented, "Whether or not I go after the prediction markets — I don’t know. This is something we are looking at and it’s definitely under review."
Further elaborating on the issue in an interview with ABC News, DeMarinis stated, "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 current legal scrutiny surrounding prediction markets can be traced back to a lawsuit that questioned the legality of offering election-based markets. Kalshi's 2024 court victory over the Commodity Futures Trading Commission (CFTC) allowed the platform to resume its election market offerings, which had previously been halted by the regulator. The dispute originated from Kalshi's aim to provide markets on which political party would seize control of Congress following the upcoming elections.
A federal appeals court ruled that the CFTC had not sufficiently proven its claims that permitting prediction markets to handle real money on political outcomes would transform the commission into an "election cop." The ruling emphasized the critical importance of ensuring election integrity and preventing misinformation, stating that although those concerns are significant, the CFTC failed to demonstrate that event contracts would likely cause such harms.
The regulatory climate shifted after Donald Trump won a second presidential term in November 2024. In recent months, the CFTC moved from a position opposing event contracts for political and sports outcomes to filing lawsuits supporting them nationwide.
