In June we wrote Part I of this story: prediction markets are quietly becoming financial infrastructure, and they have a liquidity problem nobody wants to price. Part II is the constitutional sequel, and it arrived in Wisconsin.
The Warning, and the Response
The Wisconsin Elections Commission warned that voters cannot legally cast a ballot in an election they have bet on.
State law disqualifies anyone who has placed a “bet or wager” on a race. The commission believes that language covers event contracts — the yes-or-no markets these platforms sell.
“There’s likely a nonzero chance that courts will decide Kalshi and Polymarket are betting platforms,” said Don Millis, the commission’s Republican chair.
The commission also admitted it cannot actually police those bets, and it is unclear whether voters would face any consequence.
Kalshi, the biggest prediction-market operator by volume, accused the commission of “active voter suppression” and noted it has hundreds of thousands of users in the state.
The next day the company launched a midterm elections hub showing real-time forecasts based on how its users bet. “Wisconsin is essentially threatening to prosecute or disenfranchise its own citizens for legal conduct,” said general counsel Rick Heaslip.
This Is Not a Wisconsin Problem
Other states carry similar language. Delaware, Texas and New Jersey all ban election betting, according to Pew Research Center.
In New York, a voter suspected of betting on a result can be challenged at the polling station and made to swear a “Bribery Oath.”
The platforms say they are not casinos. They offer event contracts regulated by the Commodity Futures Trading Commission, and the CFTC has sued states on their behalf. The Supreme Court is the likely destination.
Supporters say these markets channel the wisdom of crowds, and they point to 2024, when the markets called the presidential result while poll-based models had it a tossup.
Critics worry someone could place a large bet to make a candidate look like the leader and sway voters. Insider trading is a live concern too.
The Brokerages Are Still Building
The legal war has not slowed the commercial one. Robinhood is in talks with Crypto.com to widen its foothold in these markets.
Robinhood has relied on Kalshi to supply contracts. What began as a partnership is turning into direct competition.
This summer Robinhood launched Rothera, a futures and derivatives exchange, with market maker Susquehanna. Since then its customers have made up a shrinking share of Kalshi’s volume, analysts say.
The scale is not small anymore. Kalshi saw $27 billion of volume in World Cup markets, against roughly $1 billion tied to the 2024 presidential election.
What the Crowd Is Actually Pricing
Strip out the litigation and there is one number worth carrying home.
These markets currently price the S&P 500 at 64% to be 2026’s best-performing asset. Gold gets 20%. Bitcoin gets 16%.
After a week that included a war, an oil round trip and a rough market, the money still says the plain index beats the shiny alternatives.
So does our allocation, which is a more comfortable place to agree with a crowd than a ballot box.