Prediction-market trading on U.S. elections is surging ahead of the 2026 midterms.

At the same time, states are trying to ban these platforms as unlicensed gambling.

Election administrators worry that heavy financial betting could further damage public confidence in democracy.

Jared DeMarinis, Maryland’s election administrator, called it “a troubling trend” that officials nationwide must address.

Platforms like Polymarket and Kalshi let people buy and sell contracts priced between 1 and 99 cents.

These contracts cover races from mayor to U.S. Senate.

Company officials say this is not gambling, but is similar to trading stocks or commodities to hedge against election outcomes.

They note that federal law requires insider-trading protections.

They also point to research showing their odds closely match real results.

Still, the markets have had problems this year.

They favored a losing candidate in Wisconsin’s governor primary.

In Los Angeles, influencers used market odds to falsely accuse officials of cheating.

Courts are now deciding whether states can regulate or ban these markets under gambling laws.

However, rulings are unlikely before the election.

Billions of dollars may trade on questions like which party will control Congress.

Officials are preparing public education campaigns to stress that market odds are not polls or vote counts.

Some counties are adding prediction-market betting to worker oaths.

Analysts also warn that wealthy partisans could bid up odds to sway voters or help candidates fundraise.

Platform officials say financially motivated traders quickly correct any manipulation.