Officials said it's the tightest measure they can take to ensure employees, who have access to ballots, do not commit insider trading on election contracts.
"Obviously, we have no control over prediction markets themselves, or how people react to them," said Thomas Galvin, a supervisor for Maricopa County, Arizona. He helps oversee voter tabulation and Election Day voting.
"When we implement a policy for our employees not to trade or bet on non-public information, that goes a long way towards showing people that not only are we working hard to maintain transparent elections, but also shows that we are being very aware of new technology," he said.
Election odds vs. polls
Election odds on prediction markets are a live response to breaking news. There, participants can forecast and see in real time where the market stands on candidates' likelihood of a victory. This live accessibility provides a competitive advantage over traditional forecasting polls, said Koleman Strumpf, a professor of economics at Wake Forest University.
"By the time you see the poll, it's ancient history," Strumpf said.
A Kalshi spokesperson told CNBC that instant odds are a key feature for prediction markets, but they "complement" polling rather than acting as a replacement.
On the other hand, pre-election polls measure a voter's intention and take a sample of selected respondents who are representative of a broader population, said Thessalia Merivaki, a professor of government at Washington State University. Unlike prediction markets, where anyone can forecast who will win a key race, statistical techniques are used to select a sample for a poll, she added. Even the questions asked in a poll differ from an election contract.
"The question is very different. It doesn't ask, 'Do you think X candidate or Y candidate will win? ' Pre-election polls ask, 'If the election were to be held today, who would you vote for? '" Merivaki said.
Despite these distinctions, election officials are growing concerned that voters cannot differentiate between the two.
"I have seen when I travel the district and when I travel the county, that some people confuse the numbers reflected in prediction markets with public opinion polling," said Galvin. "Just because someone has a 98% chance of winning on a prediction market doesn't mean that they're winning in the polls 98 to 2. "
Avoiding backlash
Arizona's Maricopa County was in the spotlight after President Donald Trump Election workers process ballots for the 2024 U.S. presidential election on Election Day at the Maricopa County Tabulation and Election Center in Phoenix, Arizona, U.S., November 5, 2024.Caitlin O'Hara | Reuters
Galvin said the prohibition reassures the public that the county champions election integrity and protects employees in the event individuals use prediction markets odds to claim there is election fraud.
"We definitely had a situation here where early election returns differed from market expectations, and that resulted in suspicion and questioning of normal ballot processing and canvassing procedures in California," Logan said at the webinar.
In that race, city councilmember Nithya Raman advanced to a November runoff against incumbent mayor Karen Bass. Prediction market traders anticipated Bass would compete against former reality TV star Spencer Pratt in the November contest. While Pratt led Raman early in the vote count,Where platforms stand
Instead, a Polymarket spokesperson reiterated that states do not have legal jurisdiction to regulate prediction markets.
Gabby Jones | Bloomberg | Martin Lelievre | Getty Images
Just outside of Philadelphia, an election office in Delaware County in Pennsylvania banned roughly 2,200 employees from trading on prediction market contracts tied to elections. The office's oath already ensured bets on elections were prohibited. It later added prediction markets.
"It makes sense to add prediction markets to that [oath], because prediction markets are gambling, despite the dubious claims that they are not," said James Allen, Delaware County's elections director.
Similarly, Maryland's administrator of elections
-CNBC's Charlotte Morabito contributed reporting. Disclosure: CNBC and Kalshi have a commercial relationship that includes customer acquisition and a minority investment.
