Do state election betting bans apply to prediction markets?

Wisconsin sent prediction market platforms spinning last month when its election commission released a directive reminding voters that betting on elections — including via trades on event contract exchanges — is illegal in the state, based on a more than 175-year-old law. 

What shocked people was the penalty that Wisconsin places on those who break its law: violators lose the right to vote in the election they bet on. 

Prediction market platform Kalshi blasted the law. “This is blatantly unconstitutional and illegal,” Benjamin Freeman, head of politics growth at Kalshi, wrote in a post on X. Polymarket told the Milwaukee Journal Sentinel it looked forward to addressing the claims through the appropriate legal process. 

Wisconsin isn’t alone. Twenty-three states have laws on the books that ban betting on elections, according to Pew Research Center. New York also doesn’t allow voters to cast a ballot in an election that they’ve bet on, while in most of the other states violators can face fines or jail time for wagering on an election. 

However, does the language in state laws apply to trades placed on event contracts? The answer depends on the state, but many aren’t sure. 

Hotly contested

In Colorado, betting on an election is a class 2 misdemeanor punishable by up to 120 days in jail or a $750 fine. Lawrence Pacheco, a spokesman for the Colorado state attorney general, was clear in a statement: “Colorado state law bars bets or wagers on elections, and that includes prediction markets.”

But few states were as direct as Colorado. A spokesperson for the New York attorney general said that the office has not made an official interpretation on its election betting statute and whether it applies to prediction market trades. 

The office for the Arizona attorney general declined to comment on whether its law applies to election event contracts due to active litigation with prediction market platforms. Phil Bueler, a press secretary for the Tennessee attorney general, said that he cannot comment on what is essentially a request for a legal opinion about a “hotly contested issue.”

In March, the Maryland State Board of Elections in a memo to voters said that users should exercise caution when considering trading elections on prediction market platforms, warning that it could amount to violating the state’s law banning wagering on elections. Then, in July, the state’s administrator of elections Jared DeMarinis wrote a letter to the office of the state prosecutor to investigate whether prediction markets’ election offerings violate Maryland’s law.

“That’s why we did the March letter early,” DeMarinis said in an interview. “This is still in the early stages… and we need to make sure we seek clarity.” He added he is interested — if the…