CNN
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While gamblers outside the United States have long been able to place bets on who will win the White House, Americans can make political bets of their own in a historic shift in this election cycle.

More than $100 million in election bets have been traded on Kalshi, a federally regulated prediction market that was given the green light to offer election bets after a federal appeals court in Washington, DC, this month upheld a lower court order that gave way to legal politics gambling. Other platforms in the US have started offering election-related betting in the wake of the ruling.

The election markets have not gone unnoticed by Republican Party presidential candidate Donald Trump, who has touted his chances on social media and at campaign events.

“You can see that we have risen considerably in the polls. They have something new, a new phenomenon, and that is betting polls,” the former president said during a stop in Michigan on October 18. “I don’t know what the hell it means, but it means we’re doing pretty well. Good.”

The last national CNN poll before votes are counted showed Trump and his Democratic rival, Vice President Kamala Harris, in a deadlocked race for the White House.

While the platforms have marketed their odds as election predictions and claim they allow their users to hedge their bets on different outcomes, the Commodity Futures Trading Commission, which sought to block Kalshi’s political contracts, has warned that they could erode public perception of democratic power. process.

With more than 50 million ballots already cast ahead of Tuesday’s election, here’s what you need to know about election betting in the US.

Kalshi launched his offer – ranging from which party will control the House and Senate in 2025 who will sit in the Oval Office — earlier this month after a three-judge panel for the D.C. Circuit Court of Appeals found that the agency had failed to demonstrate how it or the public “will be irreparably harmed” while it appeal is pending.

The CFTC had appealed a lower court ruling that found Kalshi’s contracts did not involve “unlawful activity or gambling.” While the appeals court ruling allows Kalshi to offer election betting, it also gives the organization another opportunity to pause the ruling if more concrete evidence of irreparable harm emerges.

In the meantime, the court granted the CFTC’s request to expedite the case and allowed the court to hear oral arguments on the case in the coming months.

Robinhood, a popular stock trading app, launched betting on the presidential election on Monday. PredictIt, another prediction market embroiled in a legal battle with the CFTC, is also offering election contracts while the case is ongoing.

Not all prediction markets are available in the US. Polymarket, an offshore, unregulated, crypto-based prediction market, is banning US users due to a 2022 settlement with the CFTC.

David G. Schwartz, a gaming historian at the University of Nevada, Las Vegas, told CNN that for much of the country’s history, Americans gambled on their elections in markets largely centered in New York City. Political betting, he said, has its roots in informal, “player-to-player” betting. “Betting on elections was a consequence of that. It was never approved by the state,” Schwartz said.

According to economic historians Paul Rhode and Koleman Strumpf, who have studied the history of political gambling markets, Americans were placing election bets on Wall Street as early as the 1880s, with formal political gambling markets “seeming to have largely disappeared by 1944.” . Those opportunities were published in newspapers, Rhode and Strumpf note.

Since the first half of the 20th century, political gambling has been considered illegal in the US due to various state laws and state court rulings. Some states, such as Nevada, Texas and Michigan, explicitly prohibit this practice.

However, researchers have long studied political prediction markets.

The University of Iowa has operated the Iowa Electronic Markets, which offers contracts on the outcomes of political events, for research purposes since the late 1980s. PredictIt was launched in collaboration with Victoria University of Wellington in New Zealand.

Because Kalshi is a federally regulated market, political betting is protected by state laws that include exceptions for business transactions and commodity trading.

Not everyone is allowed to take a political gamble on the platform. Kalshi is only available to US residents and prohibits candidates, campaign staff, pollsters and decision-making staff at major media organizations, among others, from making political bets.

Some states have taken additional steps to regulate election betting.

In Wisconsin, anyone who has “directly or indirectly become interested or interested in a wager or wager depending on the outcome of the election” is not allowed to cast a vote. If they do, their vote could be challenged, a spokesperson for the state election commission told CNN.

As the legal dispute with Kalshi plays out, the CFTC has begun a broader crackdown on event-based betting, proposing a rule earlier this year that would explicitly ban contracts on the outcome of elections, awards shows, sporting events and competitions. other events. If the agency were to finalize those regulations, it is likely that the prediction markets would have to file another lawsuit against the agency to offer political betting.

Meanwhile, Kalshi has added more markets in the weeks since launching its congressional contracts, allowing its users to bet on the margin of victory in battleground states like Wisconsin or Pennsylvania, or on whether tech billionaire Elon Musk will be nominated to a Cabinet. seat.

For Cantrell Dumas, director of derivatives policy at Better Markets, a nonprofit that advocates for financial reform, hedging business interests on those contracts isn’t possible. He says it underlines what his organization has been arguing: that Kalshi’s markets were primarily not for hedging, but for gambling.

“The longer we wait, the more truth is revealed, right? No company can hedge whether or not Kamala Harris will lose by three points, or whether Donald Trump will win by two points,” Dumas said.