Election Betting Limits Spread as States Target Prediction Markets

WASHINGTON: Election betting is illegal in some or all circumstances in 32 states, according to new Pew Research Center analysis.

The findings add fresh context to the fast-moving fight over prediction markets, where platforms such as Kalshi and Polymarket allow users to trade contracts tied to real-world events, including elections.

The Pew Research Center analysis, based primarily on National Conference of State Legislatures data, found that 23 states prohibit election betting entirely. Another nine states restrict it in certain circumstances, while 18 states and Washington, D.C., have no law that specifically mentions election betting.

Election Betting Restrictions Cover 32 States

State-level restrictions on election betting are widespread. States including Arizona, Nevada, Texas, Illinois, Michigan, New York, New Jersey, Kentucky, Tennessee, North Carolina and Wisconsin prohibit election betting entirely.

Other states take a narrower approach. Oregon, Iowa, Massachusetts, Pennsylvania, Rhode Island, North Dakota, South Dakota, Indiana and West Virginia restrict election betting only in certain scenarios.

Those partial restrictions vary widely. In some states, the rules focus on candidates or people involved in elections. In others, penalties apply to bookmakers, pool sellers or people who organize election-betting schemes rather than ordinary participants.

Pew also noted that some state election-betting laws are old. Idaho had an election betting statute in 1887, before it became a state. That history shows that election wagering is not a new legal concern, even though digital prediction markets have given the issue a modern form.

Prediction Market Bills Spread Across States

At least 16 states have introduced legislation to regulate prediction markets in 2026. Minnesota, Kentucky and Tennessee have enacted bills, while legislation remains pending in states including California, Hawaii, Iowa, Illinois, Ohio, Pennsylvania, New Jersey, New York, Vermont and North Carolina.

Pew also identified failed legislative efforts in states including Connecticut, Georgia and Virginia, while Virginia was listed as having both failed and pending legislation. The analysis did not include executive action by governors, and some states with enacted bills may also have additional bills that remain pending or failed.

Minnesota became the first state to prohibit Kalshi, Polymarket and similar platforms statewide, although its law includes exceptions for certain contracts such as weather-related trades or event contracts that can function as insurance-style hedges.

Kentucky has also moved aggressively. Lawmakers there approved measures tied to election betting, prediction market taxation and restrictions on associations contracting with prediction market operators. Tennessee passed a bill making it a felony to try to influence an event while holding a prediction market trade related to that event.

Federal and State Rules Collide

The dispute centers on whether prediction market contracts should be treated as financial products or as gambling. The Commodity Futures Trading Commission has taken the position that platforms such as Kalshi and Polymarket offer tradable financial products under federal oversight, while state officials have pushed back when those products resemble election betting, sports betting or other regulated gambling activity.

That legal split has become central to the wider prediction market debate. Supporters say event contracts can produce useful probability signals. Critics argue that wagering on elections, sports or sensitive public events raises consumer protection, manipulation and integrity concerns.

The Pew data shows that states are not approaching the issue uniformly. Some are relying on old election betting statutes, others are passing new prediction market bills, and some have no law that specifically references election betting at all.

That uneven landscape is likely to keep prediction markets in legal conflict. As platforms expand into elections, sports and other high-interest events, the question of whether federal financial regulation overrides state gambling law will remain one of the industry’s most important regulatory battles.

RELATED TOPICS: Regulation