US election betting goes mainstream

Lea Hogg September 15, 2024

Share it :

US election betting goes mainstream

Election betting in the U.S. is emerging from the shadows, spearheaded by Kalshi, a Silicon Valley-backed derivatives start-up. Kalshi recently received a green light from a federal judge to offer political betting markets on the control of Congress, despite ongoing legal battles with the Commodity Futures Trading Commission (CFTC). This decision represents a seismic shift for the U.S. election-betting landscape, long confined to offshore sites and academic projects. However, this development raises significant questions about the future of democracy, transparency, and the commodification of elections.

Money and politics, a risky mix

According to Politico, the CFTC has battled to keep election betting out of the US for many years citing concerns over its potential to undermine the integrity of elections. Critics argue that allowing high-stakes wagers on political outcomes opens the door for wealthy individuals or corporations to exert undue influence. Senator Jeff Merkley starkly described this as a “deeply corrupting combination of dark money and election bets,” where powerful players could effectively “thumb the scale” on election outcomes.

Kalshi’s supporters, however, argue that these markets offer more accurate predictions than traditional polls. With real money on the line, they claim that market-based forecasts can filter out noise and provide a clearer picture of electoral sentiment. Some go so far as to suggest that these markets could become crucial tools for investors to hedge risks tied to shifts in government policy.

Despite the legal uncertainties, Kalshi’s markets have already generated significant interest. Within hours of going live, tens of thousands of contracts were traded, showing a clear appetite among day traders and political enthusiasts. This moment marks the first fully regulated election betting in the U.S. in nearly a century, signalling a new chapter in both finance and politics.

The timing is critical. With the 2024 presidential election looming, betting markets such as Kalshi, Polymarket, and PredictIt are becoming household names, featured regularly in news coverage. Betting odds now rival public opinion polls in prominence, reflecting the growing symbiosis between gambling and political forecasting. As Fox News recently highlighted, betting markets are already playing a role in assessing candidates’ standing, such as Vice President Kamala Harris closing the gap with Donald Trump.

Legal roadblocks and ethical dilemmas

The battle is far from over. The CFTC has vowed to continue its fight against Kalshi, arguing that election betting commodifies the democratic process. Officials warn of the potentially corrosive effect on public trust in elections, especially in an era of heightened scrutiny over ballot integrity. Whether Kalshi’s markets survive the legal onslaught remains to be seen, but one thing is clear: election betting is no longer an underground activity but a growing force in the mainstream political landscape.

As election betting makes its way into the heart of US. politics, the question remains: Is this a tool for better understanding voter sentiment, or a dangerous gamble with democracy itself?