Election Officials Are Preparing for Prediction Markets to Sow Chaos in the Midterms

When Jim Allen, the elections director for Delaware County, Pennsylvania, recently ran a training session for poll workers, he began a conversation about a topic he’d never previously had to address during training: prediction markets. “There was one person who stood up, and they said, ‘Well, what if we just want to make a minor bet on what turnout will be, that'll keep things interesting?’ And we said: ‘No, this is all bad,’” Allen, who oversees 383 precincts, recounts. As a result, Allen and the board of elections in Delaware County amended the oaths signed by people involved in elections to include “an affirmation that the workers have no direct or indirect interests in any bets, wagers, or prediction markets.” Some 2,500 people, including everyone from full-time staff in the elections office to temporary employees helping process ballots on Election Day, have signed the oath ahead of November’s midterms. “The rapid growth of prediction markets, and their plans to prey on elections, are direct threats to undermining trust in electoral outcomes,” Allen tells WIRED. “The overriding concern is that prediction markets have the potential to monetize a reward for manipulating results and, equally concerning, capitalizing on the anger and frustration by those who lose in these prediction markets.” Increased Threats With less than 100 days left until the midterms, and with President Donald Trump and members of his administration working overtime to undermine trust in American democracy, WIRED spoke to election officials across the country struggling to get their heads around how prediction markets could further complicate Election Day. Last week’s Wisconsin gubernatorial primary showcased how large the discrepancy can be between prediction market odds and how a race actually shakes out, as both Kalshi and Polymarket had progressive candidate Francesca Hong as the likely winner until the results started coming in. (Traditional polling was also wildly off.) Election officials see risk in this type of scenario, where people place too much confidence in the probabilities shown by the markets and make wagers expecting guaranteed money. There’s also concern over whether prediction markets could fuel aggression against poll workers and other people involved in elections, something that some officials say they’ve already witnessed. Prediction markets “fed a lot of the volatility in the aftermath of the June election,” says Dean Logan, county clerk for Los Angeles County, the country’s most populous election jurisdiction, during a webinar organized by the Partnership for Large Election Jurisdictions. “I won't go into great detail about how that resulted in threats or aggressiveness from observers or people who had a stake in the outcome of the election, but it is something that we definitely saw, and we saw it at a level that we haven't seen in prior elections.” “Let us be unambiguous: Threatening an election official or poll worker is a crime, and Kalshi condemns it in the strongest terms, full stop,” Kalshi spokesperson Jacki McGavick says. Both Kalshi and Polymarket tell WIRED that they will not allow markets about whether there will be unrest at the polls. One of the concerns election officials repeatedly raised was that voters appear to be confused about just what the odds in election markets represent. This was backed up by a recent survey conducted by the Partnership for Large Election Jurisdictions, which found that 75 percent of respondents were unable to correctly say what prediction market odds represented, with 35 percent of respondents claiming they were either counted votes or official projections from state officials. “Prediction markets are a form of speculation, but they are increasingly being presented, and in some cases interpreted, as indicators of likely election outcomes,” Logan tells WIRED. “The challenge is that many people don't distinguish between a market reflecting the views of participants and the official election process.” For years, election deniers have leveraged the fact that many election processes are not very well understood by the general public to push disinformation. Now, officials are concerned that misunderstanding what predictions markets represent will make that situation even worse. “What happens when there's a difference between what the prediction markets show and what the certified results show?” Amy Cohen, executive director of the National Association of State Election Directors, tells WIRED. “That's hard, because you're combining two topics that the general public doesn't have a great understanding of, which is elections and prediction markets." While election officials consider how to address these issues, prominent prediction market trader Caleb Davies sees some fears over market integrity as overblown. “They sound like valid concerns, but I just don't think that they hold up to much scrutiny,” he says. If somebody attempts to manipulate a race by spiking the odds in favor of an underdog, there will be politics traders monitoring the market who see an opportunity to make money correcting it. “A smart trader is going to see that and then drive them right back to being an underdog almost immediately and just make the profits from it—it’s not a wise strategy.” Polymarket spokesperson Annabel Walsh made a similar point. “Other traders will recognize that there's an opportunity to turn a profit off of that artificial boost,” she says. There are recent examples of how this type of market will quickly correct when a trader appears to attempt to skew the results, and when asked about this risk, Kalshi sent WIRED a case study it published on an event during the Los Angeles mayoral election. In that incident, someone on Kalshi placed an enormous bet on Spencer Pratt winning that was notably out of step with how he was polling; it skewed the odds for 9 seconds. Still, concerns remain that manipulation is possible, especially in races with fewer participants speculating on the outcome than something like the closely watched LA race. Some House races currently have only a few thousand dollars wagered, which means it does not take much money to impact odds. Andrew Cates, a Texas-based election law attorney, worries that smaller election markets with low volume can be easily manipulated: “Anybody could place a big bet on a race and skew at least the perception of the odds of that person winning, and the overall groundswell of support for that person.” Insider Trading Betting on the outcome of elections on prediction markets was a niche pursuit for many years. The smaller prediction market platform PredictIt has offered election trading since 2014 and continues to operate. Notably, it has stricter guardrails than newer competitors and lets people trade only as much as $3,500 on each race. “Unlike Kalshi and Polymarket, PredictIt caps individual positions,” PredictIt public relations director Toni Galeassi tells WIRED. “As prediction markets grow, we believe responsible market design, including appropriate limits and clear communication about what market probabilities represent are important.” Galeassi also called any threats to election workers “unacceptable.” In 2024, Fortune reported that $3.2 billion had been wagered on the outcome of the presidential election. One French user of Polymarket won $80 million after predicting that Donald Trump would win. But companies like Kalshi and Polymarket have seen massive growth in recent months and are poised to go even more mainstream. “This is our first real, full election cycle for national elections where prediction markets have been fully unleashed,” says Amanda Fischer, a former SEC official who now directs policy for the financial reform nonprofit Better Markets. Both Kalshi and Polymarket have dedicated midterm hubs on their platforms. The increased interest was seen in California in June, during the primary for the Los Angeles mayoral race, when affiliate marketers paid by Kalshi and Polymarket paid right-wing influencers to post content questioning the outcome of the vote. The companies’ rules prohibit affiliates from posting election-denial content; after public outcry, they made the influencers remove the “paid promotion” tags on their posts, and both companies tell WIRED that they will ask affiliates to comply with their guidelines. But it’s an open question as to whether some of these affiliates will continue to spew false narratives about elections. “Those accounts can influence narratives and voter behavior,” notes Fischer. There have been multiple prosecutions of insider trading on prediction markets, and election officials are concerned about this happening on Election Day given that some election officials are aware of the final results before they become public. “Prediction markets lead to possible manipulation or even insider trading,” Jared DeMarinis, administrator of elections for the Maryland State Board of Elections, tells WIRED. “The threat grows as these sites become increasingly popular and legitimatized by the media in lieu of polling. Just like in cases of election disinformation, once it takes root it will take Herculean efforts to undo its damage to the electoral process.” DeMarinis revealed to WIRED that his office was also looking to follow Delaware County’s lead and demand that those involved in running elections in the state sign a declaration that they are not going to use prediction markets to bet on the outcome of the election. And they are not the only ones. In July, Arizona Secretary of State Andrian Fontes banned his staff from using nonpublic information to place bets on elections on prediction markets. “We are reinforcing our internal policies to ensure that non-public information, particularly information related to election administration, is never used or shared by staff for personal gain or unauthorized purposes,” Monica Gordon, Cook County clerk, tells WIRED. Surveillance As well as demanding election workers sign oaths, some states are making it explicit just what punishments await for those who bet on elections. Last month, the Wisconsin Elections Commission warned voters they "cannot, even indirectly, make a bet or wager on the outcome of an election and then vote in that same election." A Kalshi employee on X described the move as “active voter suppression.” It’s already against the law to trade on inside information on prediction markets, and a variety of state authorities have attempted to enact a patchwork of laws explicitly forbidding government employees from doing so. The platforms also have internal rules. “Specifically in elections, we have a broad list of people that are not allowed to be in the markets, where if you're a donor, a staffer, a family member of staffers, and many more, you’re not allowed in the markets,” Kalshi spokesperson Jack Such says. In the past year, Kalshi has flagged a number of market manipulation and insider trading cases to the Commodity Futures Trading Commission, including a Senate candidate who later claimed he bet on himself deliberately. Another Kalshi spokesperson, Jacki McGavick, emphasized that the company “aggressively surveils” election markets. “We have developed surveillance software that preemptively blocks certain prohibited traders—rather than just enforcing retroactively—for all political markets,” she tells WIRED. Polymarket recently hired former FBI official Shana Bautista, who also worked at Coinbase, as its global head of investigations and intelligence. The company says it cannot share specifics of active investigations but that it has increased the size of the team monitoring elections in advance of the midterms. “When it comes to elections, and how sensitive they are, our team of investigators is actively reviewing and identifying anomalous activity, and then we have robust and standard processes for handling it,” Bautista says. The Commodity Futures Trading Commission, which oversees prediction markets at the federal level, has no plans to do any midterm-specific market integrity surveillance. “The CFTC is extensively monitoring election markets, just like all other markets, for manipulation, fraud, or insider trading,” spokesperson Brooke Nethercott tells WIRED. Some prediction market critics believe that laws need to be changed to take this much further, to prevent government officials from participating altogether as a guardrail against manipulation and potential corruption. “All federal government employees at any level, any part of the federal government, and the military, should be banned from using prediction markets at all,” says Alexandra Thornton, the senior director for financial regulation at the Center for American Progress. “It should be sort of a condition of employment.” [Image text:] 6.05 6.00 840 3 Uoi 0.23 0.24 0.24