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Los Angeles County election officials are examining steps ahead of the November midterms to respond to the rising popularity of election trading via prediction markets, including a possible ban on wagering for county election workers.
The discussions follow a fracas during the June ballot count, when a handful of influencers suggested fraud could be occurring in L.A.’s mayoral primary because the results began diverging from the market’s prediction.
That incident, the most prominent interaction of prediction markets and a U.S. election to date, revealed a new dynamic in the battle for public trust in elections. Now, election administrators around the country are considering the possible implications of the markets’ forecasts, including whether they have the power to affect voter confidence in election results.
“We’re … trying to find our way in this,” L.A. County Registrar-Recorder Dean Logan said in an interview. “It’s opened up a lot of questions that we’re grappling with.”
Three months before the midterms, with much of the American public concerned about democracy and trust in elections dropping, officials are paying attention to anything that could create further uncertainty around how elections are run.
The midterm contests are high stakes for both parties, which are battling for control of Congress amid a difficult economy, the war in Iran and low approval ratings for President Trump. And many Americans are wagering on what might happen — users have traded nearly $200 million on the midterm elections so far, a July analysis by NBC News found.
Prediction market platforms and their proponents say trading contracts on the markets is not the same as betting, likening it instead to trading on the stock market. Critics say it amounts to gambling, regardless of how the markets are set up.
The timeline for election administrators to think through the issue before November is tight, and it poses challenges for offices that already are stretched thin preparing for other possible election-day scenarios. What happened during the L.A. mayoral primary, however, has prompted discussions around the country, said Carolina Lopez, executive director of the Partnership for Large Election Jurisdictions, or PLEJ, a nonpartisan organization that represents election administrators.
As prediction markets stir debate over betting on politics, the Los Angeles mayoral race raised a new question: What happens when people wager on elections?
“The potential effect on confidence [in elections] is significant,” Lopez said.
A spokesperson for Kalshi, one of the leading trading platforms, said the platform bans insider trading and welcomes any policy measures doing the same. The company takes “seriously our responsibility to be a responsible actor in this space,” spokesperson Jacki McGavick said.
Los Angeles could become one of the first major election jurisdictions to implement guidance or policy related to prediction markets. Delaware County, Pa., in suburban Philadelphia, already has taken such a step — adding prediction markets to an oath poll workers already were required to sign affirming that they have not wagered on the election.
Last month, Maryland’s top election official asked the state prosecutor to open an investigation into the legality of prediction markets. In late July, Wisconsin’s election administrator warned voters that it is illegal under state law to both vote in and bet on an election. That drew swift attacks from executives at Kalshi, one of whom claimed the state would “disenfranchise voters who use Kalshi.”
