More than half of U.S. states are taking steps to regulate or ban election-related betting markets, following a surge in popularity for platforms that allow users to trade contracts based on predicted election outcomes. According to a recent analysis by Pew Research drawing from data by the National Conference of State Legislatures, these “prediction markets” have prompted legislative responses amid ongoing debates about legality and oversight.

Prediction markets, which include platforms such as Kalshi and Polymarket, have expanded rapidly across the country in recent years. Supporters argue these platforms offer an alternative to traditional betting by enabling participants to invest based on collective predictions rather than relying on fixed odds set by bookmakers or expert opinions. However, concerns have been raised about potential risks, insufficient regulation, and the psychological effects of betting on real-world political events.

Election betting received a significant legal boost in 2024 when it was federally legalized, a reversal from previous U.S. Commodity Futures Trading Commission (CFTC) decisions that had blocked such markets. Since then, the majority of states have moved to impose their own restrictions or prohibitions on election betting.

Almost half of the states currently prohibit election betting outright, according to Pew’s findings. An additional nine states have enacted laws that limit or regulate election betting under certain conditions. Eighteen states and Washington, DC, have yet to implement specific election betting statutes but may still apply broader gambling or financial regulations. For example, Idaho enforces a misdemeanor penalty under a statute dating back to 1887. Other states, including Oregon and South Dakota, have established rules such as barring candidates from wagering on their own contests. Penalties for violating betting laws vary widely, ranging from misdemeanors to felonies based on factors such as the amount wagered.

Among states with full bans, enforcement approaches differ. Iowa, Massachusetts, Pennsylvania, and Rhode Island focus their penalties on operators and facilitators of election betting markets, whereas Delaware and New York have instituted measures that can strip convicted participants of their right to vote. Illinois, Nebraska, and Minnesota are among the states that treat certain violations as felonies.

Amid expanding legislative activity, numerous bills have been introduced in various state legislatures seeking to impose age restrictions, tax requirements, or outright prohibitions on these platforms. These efforts have been complicated by federal regulatory dynamics. The CFTC maintains that prediction markets involve the trading or “swapping” of financial products rather than traditional gambling, placing them under federal jurisdiction and preempting state gambling laws. The commission has taken legal action against states attempting to regulate or ban prediction markets.

Minnesota became the first state to institute a comprehensive ban on platforms like Kalshi and Polymarket in May, criminalizing a wide range of activities related to prediction markets through felony provisions, with limited exceptions such as weather-related contracts. The CFTC immediately filed suit to block Minnesota’s law, describing it as an unprecedented overreach into the agency’s exclusive regulatory authority.

As prediction markets continue to attract users and provoke legal disputes, states and federal regulators are engaged in an evolving debate over how best to balance innovation, public interest, and regulatory control in the emerging landscape of election betting.