American voters can now legally wager thousands of dollars on who will win the White House next month, a new twist in the final sprint of a chaotic election cycle.
Financial exchange startup Kalshi and brokerage giant Interactive Brokers launched trading Friday morning on the first regulated markets allowing wagers on the presidential contest between Vice President Kamala Harris and former President Donald Trump.
American voters can now legally wager thousands of dollars on who will win the White House next month, a new twist in the final sprint of a chaotic election cycle.
Financial exchange startup Kalshi and brokerage giant Interactive Brokers launched trading Friday morning on the first regulated markets allowing wagers on the presidential contest between Vice President Kamala Harris and former President Donald Trump
On Kalshi, some traders will be able to bet as much as $100 million. Both companies are also offering trading on whether Republicans or Democrats will control the House and Senate next year. Interactive Brokers has markets for the Senate races in Ohio, Arizona and Wisconsin, among other swing states, as well.
“Politics is a very hot topic for a lot of people. They have strong beliefs one way or another,” said Steve Sanders, an executive vice president at Interactive Brokers. “So, since the elections are in the news, we think that this could be a catalyst to really get things going.”
More than a half-million contracts tied to the presidential race were traded on Interactive Brokers’ platform within the first few hours of the launch, according to a company spokesperson. Kalshi’s presidential markets, meanwhile, saw more than $300,000 worth of contracts traded, according to the company’s website.
The markets’ debut ushers in a new and uneasy era in U.S. politics, one where bettors and traders can freely wager on Washington.
Backers say election-betting markets offer investors a regulated means to directly offset the risks that could come from a new president or Congress ratcheting up or dialing back scrutiny on a particular industry. The markets, they say, also create a rich source of data on how the voting public is leaning in a given race. But Wall Street regulators, Washington public interest groups, as well as some Democrats on Capitol Hill, have warned that political trading could open the door to the manipulation of American elections.
“Our Democracy is fragile enough without being gamified,” Public Citizen co-President Robert Weissman said in an interview.
“Our Democracy is fragile enough without being gamified.”
Robert Weissman, co-president of Public Citizen
“There’s a real possibility of gamblers trying to shape the reality that they’re betting on,” Weissman added. “Whatever the merits of sports betting, as a fan you can’t influence the outcome. But as a citizen or political donor, you absolutely can affect the outcome of elections. That’s what democracy is, but not when it’s being motivated by a return on your bet.”
The Commodity Futures Trading Commission has long blocked election-betting derivatives markets like Kalshi’s and Interactive Brokers’ over concerns about their legality under federal and state law.
But the Rostin Behnam-led regulator’s arguments were thrown into the air last month when a federal judge in Washington sided with Kalshi and opened the door for the company to briefly launch its congressional control markets.
An appellate court quickly froze the markets, so that it could hear out the CFTC’s emergency bid to keep trading halted through the duration of its appeal. But the panel of judges on Wednesday rejected the agency’s push, clearing the way for Kalshi and Interactive Brokers to go live. Kalshi relaunched its congressional control contracts Wednesday.
Still, political betting’s fate in the U.S. is not yet settled. The CFTC is appealing the district court’s September decision. And late Wednesday, the agency proposed an expedited schedule of its appeal that would set oral arguments in the case for early December. The CFTC has also proposed to expressly outlaw derivatives that act as bets on U.S. elections, which Behnam says will risk turning the agency into an “election cop.”
“I just don’t think that Congress or the general public wants a federal financial regulator policing elections,” Behnam said last month. “That really, in my mind, is a bridge too far.”