US Election Officials Move to Bar Poll Workers From Trading on the Midterms

A Pennsylvania county wants prediction-market trading written into the oath its election workers swear, and Maryland's chief administrator plans to ask for the same statewide, the Associated Press reports. With the courts unlikely to rule before November, the workers are the one thing the states can still regulate.

• Delaware County elections director Jim Allen has asked his election board to add prediction-market trading to the state-required oath under which Pennsylvania polling-place and county election workers swear not to bet on the election, according to the Associated Press
• Jared DeMarinis, administrator of the Maryland State Board of Elections, told the AP he will ask his board to impose a similar requirement statewide, calling the growth of election trading "a troubling trend that election administrators across the nation must deal with"
• Half the states have statutes broadly banning betting on elections, the AP reported citing the National Conference of State Legislatures, but the litigation over whether states can apply gambling law to federally registered exchanges is unlikely to be decided before the midterms
• Kalshi disclosed on 31 August that it had suspended North Carolina congressional candidate Laurie Buckhout for three years and fined her for trading on her own race, under a rule barring people who influence an outcome from trading on it
• Polymarket's market on control of the House had traded $11.9 million by Sunday and priced a Democratic majority at 93.5%, while Brazil's attorney general is weighing action over the same platform's election contracts

The People Who Count the Votes Are Being Told Not to Trade Them

Election administrators in the United States have begun writing prediction markets into the rules that govern their own staff, the Associated Press reported in a piece first published on 8 September and recirculated by trade outlets this week. In Delaware County, in suburban Philadelphia, elections director Jim Allen asked the county election board to add prediction-market trading to the oath Pennsylvania requires of every polling-place and county election worker, which already binds them not to bet on the election. In Maryland, state elections administrator Jared DeMarinis said he would ask the state board to impose the same requirement across the state.

DeMarinis described election trading as "a troubling trend that election administrators across the nation must deal with". The AP reported that administrators are also discussing public education campaigns to explain that market odds are neither polls nor vote counts, after two incidents this year: a Wisconsin gubernatorial primary in which the markets, like the polls, heavily favoured a losing candidate, and a Los Angeles mayoral primary in which online influencers accused officials of cheating to keep Republican Spencer Pratt out of the run-off, pointing to odds that had favoured him finishing second.

Half the states have statutes that broadly ban betting on elections, according to National Conference of State Legislatures information cited by the AP, laws written to ensure people vote on who they think is the best candidate rather than on a financial stake. Whether those laws reach a federally registered exchange is the question in litigation across the country, from the Ninth Circuit's ruling that sports event contracts are likely neither swaps nor excluded commodities to New Jersey's petition asking the Supreme Court to resolve the circuit split. The AP's assessment is that none of it will be decided before November.

The exchanges reject the premise. Kalshi and Polymarket officials told the AP the activity is neither gambling nor a danger to democracy, and compared it with trading shares or commodities ahead of an election to hedge the winner's policies. Kalshi says its research shows events priced at 60% happen close to 60% of the time, and that manipulation is corrected by traders who profit from restoring the true price. "If you're going to try to manipulate the pricing in a highly liquid market with strong traders, it's not going to work," Kalshi general counsel Rick Heaslip said. "The pricing will snap back, and you'll simply lose money."

Both exchanges say federal law requires them to run insider-trading protections that bar candidates and campaign staff from trading on their own races. On 31 August Kalshi disclosed that it had given Laurie Buckhout, the Republican candidate in a contested North Carolina House seat, a three-year suspension and a fine for trading on her own race; press reports citing the company put the fine at $2,500, the trades at under $1,000 and the rule breached as 5.17(z), which prohibits decision-makers and people with influence over an outcome from trading on it. Buckhout called it "a dumb mistake". The Commodity Futures Trading Commission had 20 insider-trading investigations arising from Kalshi alone on its books by August.

The money is visible on the platforms themselves. By Sunday Polymarket's market on which party controls the House after the midterms had traded $11.9 million and priced a Democratic majority at 93.5%, its "Balance of Power" market $12.8 million, its market on the number of Republican Senate seats $12.1 million and its Senate control market $4.8 million, according to the platform's own figures. Individual races are thinner: the Maine Senate market had traded $1.4 million.

An Oath Is the First Election Rule That Does Not Depend on Winning the Lawsuit

Every other tool the states have reached for, from cease-and-desist letters to criminal charges, runs into the same question of whether a CFTC-registered exchange is theirs to regulate, and that question has now been put to the Supreme Court. An oath sworn by an election worker is different: it regulates the worker, not the market, and gives no exchange an obvious ground to object. It is also narrow. It reaches the people who handle ballots and not the candidates, donors, consultants or officials with early access to counts, and it is enforceable only if someone checks. But it is an early sign of the election-administration profession treating prediction markets as an integrity risk to be managed within its own rules, and that framing, once adopted in one state, tends to travel through the same associations that spread post-2020 procedures.

The Snap-Back Defence Works in Liquid Markets and the Midterms Are Mostly Illiquid Ones

Kalshi's argument that manipulation loses money is sound where there is depth to absorb it, and the House control market, at $11.9 million on one platform, probably qualifies. Most of the 435 House races and 35 Senate races do not. A single-state market at $1.4 million can be moved for a fraction of a campaign's media budget, and the AP's academic sources describe the mechanism: a large position reads to other traders as information, other money follows, and the odds skew for long enough to be quoted in a fundraising email or a news story before the arbitrage arrives. Columbia's Joshua Mitts put the case that would most concern states as a local candidate encouraging supporters to bet on them, converting a wager into a turnout incentive. None of that needs to change a result to damage confidence in one, which is the harm DeMarinis is describing.

The Buckhout Case Is Evidence the Rules Exist and a Measure of How Little They Catch

The exchanges' insider protections are real and Kalshi published a candidate's suspension itself. What they caught was a congressional candidate who bet under $1,000 on herself and, by her own account, moved to put it right once she learned there was a problem. The investigations the CFTC has accumulated from a single exchange, and the Brazilian attorney general's interest in Polymarket's election contracts, suggest the population of people with influence over outcomes and access to a trading account is larger than the surveillance built to find them. Election workers are the easy part of that population to reach. The oath is the states' admission that, for now, they are the only part.

The courts will not settle who regulates election markets before the votes are cast. The counties have decided who may not trade on them, and started with themselves.