Inside suspicious election-contracts trading on prediction markets

Spencer Pratt appeared to be a shoo-in to win the June primary in the Los Angeles mayor’s race, based on millions of dollars wagered on prediction markets aiming to call the race.  

Pratt was an unlikely candidate for mayor. The former reality TV star had never held elective office, but after the Palisades fire destroyed his home, he turned his criticism of the city’s response into a campaign rallying cry.  

Using prediction markets including Kalshi, Polymarket U.S. and Polymarket International, speculators flocked to the race, which drew more than $47 million in trades, making it the most heavily traded mayoral contest of 2026. On the eve of the June primary, one market gave Pratt a 78% chance of advancing to the November runoff.  

The prediction markets were wildly off base, and Pratt finished third.  

Pratt supporters, though, used the failed speculation to cast doubt on the integrity of the election. That drew a response from the city: “Prediction markets can add to that confusion when people treat their projections as more authoritative than the actual votes being counted,” Dean Logan, the registrar-recorder for the Los Angeles County Clerk’s Office, said in a statement to CNBC.  

Prediction markets’ failure to call the election correctly also raised the possibility that markets can be manipulated to make candidates appear to have more support than they really do. Exclusive reporting from CNBC shows that this risk is real.  

The dissonance between voter polling, speculation-fueled prediction markets and the actual outcome has grown in importance as election wagers become a prominent feature of elections. Odds and gambling platforms do not use methodologies used by traditional political polling, and therefore are not substitutes for political polls. 

Polymarket and Kalshi are the two largest prediction market platforms. They let people speculate on almost anything — from which team will be the 2027 NBA champions to whether the U.S. will confirm that aliens exist. 

Already, on these platforms the amount wagered on contracts related to the 2026 congressional elections has more than tripled bets on the 2024 races, according to ACDC. And people are increasingly using the platforms as a source of information. For midterm election markets specifically, Kalshi reports that viewers outnumber actual traders by a 5-to-1 ratio.   

Despite the Pratt race being a heavily traded, liquid contract, Kalshi detected and reported on price spikes that occurred during trading on that race in a case study it published in July. A price spike is a temporary but large price jump that can make an outcome look more likely to happen, according to experts. Price spikes can happen for a variety of reasons, such as new information changing trader expectations or a trader buying a large number of contracts, which can drive up contract prices as cheaper ones get bought up. 

On May 20, the company said, a trader on Kalshi spent $1.25…