Prediction markets and election law are on another collision course, this time in Wisconsin. State election officials recently reminded voters that participating in election prediction markets tied to races in which they cast a ballot could disqualify their vote or even lead to a referral for prosecution under a law on the books since 1849.
The guidance sparked an immediate response from Kalshi, which called the law outdated and argued it amounts to voter suppression. The exchange of criticism has added another chapter to the growing national debate over how prediction markets fit into existing election laws.
Wisconsin Says the Law isn't New
According to Wisconsin Elections Commissioner Ann Jacobs, the advisory wasn't announcing a policy change. Instead, it was simply reminding voters about a longstanding state law that prohibits participating in election-related financial activity tied to races where someone is voting.
Jacobs said the commission wanted to issue the reminder before the 2026 midterm elections as prediction markets become more widely used. Her concern is that voters should make decisions based on the candidates and issues, not because they have a financial interest tied to the outcome.
The commission's warning states that violating the law could result in:
- A ballot being disqualified
- A referral to state prosecutors
- Potential violations of Wisconsin election law
Kalshi Pushes Back Against the Advisory
Kalshi strongly disagrees with Wisconsin's position. The company has described the state's interpretation as illegal and has argued that preventing voters from participating in prediction markets discourages civic engagement rather than protecting elections. Kalshi also maintains that prediction markets are federally regulated financial products rather than activities governed by state gaming laws, a legal argument that sits at the center of lawsuits currently playing out across the country.
Company representatives have also argued that prediction markets encourage people to follow elections more closely and could motivate greater participation in the political process.
Election Experts Raise Different Concerns
Not everyone sees prediction markets as a positive development for elections. Some election experts interviewed by NPR said allowing financial positions on election outcomes could create unnecessary questions about election integrity. They pointed to hypothetical situations involving poll workers, campaign staff, or other individuals with inside knowledge who could potentially influence public confidence, even if safeguards ultimately prevent misconduct.
Others noted that existing election systems include numerous checks and balances that make widespread manipulation highly unlikely. Even so, they acknowledged that prediction markets could become another source of controversy in already contentious elections.
The Trade Handle Prediction Markets Take
This dispute goes well beyond one Wisconsin advisory. It highlights the larger conflict between state election laws that were written long before prediction markets existed and an industry that continues expanding into new areas of public life.
With midterm election contracts expected to generate significant trading activity, similar questions are likely to emerge in other states. Whether courts, state legislatures, Congress, or federal regulators ultimately provide the answers remains uncertain, but one thing is becoming increasingly clear. Election prediction markets are becoming one of the biggest legal and policy debates facing the industry today.