Election Betting Markets Draw Ire of State Gaming Regulators Ahead of November 5

Posted on: November 4, 2024, 07:53h. 

Last updated on: November 4, 2024, 10:26h.

Devin O'Connor @CasinoorgDevinO Read More

Expertise: Asia Pacific Gaming, Commercial Gaming, Legislation, Politics.

The outcome of the 2024 presidential election will finally be determined on Tuesday, November 5, as tens of millions of Americans and US citizens head to the polls to cast their vote.

In the leadup to the historic election between former President Donald Trump and Vice President Kamala Harris, countless pollsters have given their predictions as to who will win. However, the 2024 election also features more legal wagering on the presidential race than ever before. Such betting markets, their supporters claim, are more accurate foretellers of election results.

Election betting markets are operating lawfully, at least for the time being, as a federal court case regarding their legality continues to play out. In the meantime, state gaming agencies are warning consumers that no legal, regulated sportsbook is allowed to take bets on political events.

We know elections sometimes feel like a sport, but the reality is they are not,” said Connecticut Department of Consumer Protection Commissioner Bryan Cafferelli. The state agency oversees gaming in Connecticut.

“Wagering on an unlicensed platform just to bet on an election leaves consumers’ personal information and money vulnerable to theft and fraud. Any platform offering wagers on the election is unregulated by the Department of Consumer Protection. No licensed platform may offer wagers on election outcomes in Connecticut,” Cafferelli added.

Federal Ruling

In September, a federal appeals court sided with Kalshi, an online political wagering exchange that utilizes derivatives and operates in a peer-to-peer manner. The court said the Commodity Futures Trading Commission (CFTC) overreached its authority when it ordered platforms like Polymarket, Kalshi, and PredictIt to stop taking bets on US elections.

The U.S. Court of Appeals for the Washington, DC Circuit disagreed. 

Ensuring the integrity of elections and avoiding improper interference and misinformation are undoubtedly paramount public interests, and a substantiated risk of distorting the electoral process would amount to irreparable harm. The problem is that the CFTC has given this court no concrete basis to conclude that event contracts would likely be a vehicle for such harms,” the ruling read.

Connecticut isn’t alone in warning consumers not to participate despite the federal opinion that — at least for now — allows Kalshi to take election bets from US-based players. The Washington State Gambling Commission also weighed in.

“They are not legal,” said Washington State Gambling Commission Communications Director Troy Kirby. “The illegal component is that there’s a consideration, money involved. If you decide to take that chance, it’s at your own risk.”

Federal Law Trumps State 

Contessa Brewer, who covers the gambling business for CNBC, questioned how betting sites were taking action on the presidential race without holding state-issued gaming licenses. She called on the New York State Gaming Commission to respond via X.

Kalshi does not have a gaming license. Betting on the election is not permitted in New York, not in any state,” she tweeted. “And yet Kalshi is boldly proclaiming ‘Live Bets’ on its NYC advertising.”

Brewer followed up the post with clarification.

“A legal expert tells me no state regulators will be able to take action against Kalshi because the federal agency CFTC rules supersede state rules. Kalshi is able to operate because a court sided with the platform when it argued it’s not gambling,” Brewer wrote.