As voters cast their ballots in this election, some Americans are placing bets. Here's what you should know

CNN
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While gamblers outside the United States have long been able to place bets on who will win the White House, this election cycle, in a historic twist, Americans will be able to place their own political bets.

More than $100 million in election bets were traded on Kalshi, a federally regulated prediction market that was given the green light to offer election betting after a federal appeals court in Washington, D.C. this month upheld a lower court order clearing the way political gambling. Other platforms in the US have started offering election-related betting following the ruling.

The election markets have not gone unnoticed by Republican Party presidential candidate Donald Trump, who has touted his chances on social media and at campaign events.

“As you can see, we are pretty far ahead in the polls. You have something new, a new phenomenon, and that is gambling polls,” the former president said during an Oct. 18 visit to Michigan. “I don't know what the hell that means, but it means we're okay.” So.”

The final CNN national poll before the votes were counted showed Trump and his Democratic rival, Vice President Kamala Harris, in a deadlocked race for the White House.

While the platforms market their odds as election predictions and claim that they allow their users to hedge their bets on different outcomes, the Commodity Futures Trading Commission, which sought to block Kalshi's political contracts, has warned that they are hurting the public perception of the Democrat could procedures.

With more than 50 million ballots cast ahead of Tuesday's election, here's what you need to know about election betting in the US.

Kalshi presented his offers – ranging from which party will control the House and Senate in 2025 who will sit in the Oval Office — earlier this month after a three-judge panel of the D.C. Circuit Court of Appeals found that the agency had failed to explain how it or the public will be “caused irreparable harm” while the appeal is ongoing .

The CFTC had appealed a lower court ruling that found Kalshi's contracts did not involve “unlawful activities or gambling.” While the appeals court ruling allows Kalshi to offer election betting, it also gives the agency another chance to suspend the ruling if there is more concrete evidence of irreparable harm.

Meanwhile, the court granted the CFTC's request to expedite the case and could hear oral arguments on the matter in the coming months.

Robinhood, a popular stock trading app, launched betting on the presidential election on Monday. PredictIt, another prediction market embroiled in litigation with the CFTC, is also offering voting contracts while the litigation is ongoing.

Not all prediction markets are available in the United States. Polymarket, an unregulated overseas crypto-based prediction market, is banning US users in 2022 following a settlement with the CFTC.

David G. Schwartz, a gaming historian at the University of Nevada, Las Vegas, told CNN that for much of the country's history, Americans have bet on their elections in markets largely based in New York City. He said political betting has its roots in informal “player-to-player” betting. “Betting on elections was a consequence of that. It was never approved by the state,” Schwartz said.

According to economic historians Paul Rhode and Koleman Strumpf, who have studied the history of political betting markets, Americans were placing election bets on Wall Street as early as the 1880s, with formal political betting markets appearing to have “largely disappeared by 1944.” These quotas were published in newspapers, Rhode and Strumpf note.

Since the first half of the 20th century, political gambling has been considered illegal in the United States due to various state laws and court rulings. Some states such as Nevada, Texas and Michigan specifically prohibit this practice.

However, researchers have long studied political forecasting markets.

The University of Iowa has operated the Iowa Electronic Markets, which offers contracts on the results of political events, for research purposes since the late 1980s. PredictIt was launched in collaboration with the Victoria University of Wellington in New Zealand.

Because Kalshi is a government-regulated market, its political interests are protected by state laws that provide exemptions for business transactions and commodity trading.

Not everyone is allowed to place a political bet on the platform. Kalshi is only available to U.S. citizens and prohibits, among other things, candidates, campaign staff, poll workers, and decision desk employees of major media organizations from placing political bets.

Some states have additional measures to regulate election betting.

In Wisconsin, anyone who has “made or participated, directly or indirectly, in a wager or wager that depends on the outcome of the election” is not allowed to cast a vote. If they do so, their vote could be challenged, a spokesperson for the State Election Commission told CNN.

As its legal battle with Kalshi continues, the CFTC has launched a broader crackdown on event-based betting: earlier this year, it proposed a rule that would explicitly ban contracts on the results of elections, awards shows, sporting events, etc other Events. Should the agency finalize this rulemaking, prediction markets would likely have to file a lawsuit against the agency again in order to offer political betting.

Meanwhile, in the weeks since it launched its congressional contracts, Kalshi has added more markets that allow its users to bet on the margin of victory in battleground states like Wisconsin or Pennsylvania, or on whether tech billionaire Elon Musk will vote for a Cabinet is nominated seat.

For Cantrell Dumas, director of derivatives policy at Better Markets, a nonprofit that advocates for financial reform, it's not possible to protect business interests in these contracts. He says it underscores what his organization has argued: that Kalshi's markets are not primarily for hedging but for gambling.

“The longer we wait, the more truth will come to light, right? “No company can insure whether Kamala Harris loses by three points or whether Donald Trump wins by two points,” Dumas said.