Six years after the 2018 Supreme Court decision that led to widespread legalization of mobile sports betting, U.S. sportsbooks dangle a variety of granular and obscure potential wagers in front of customers. Their influence reaches deep into U.S. society.

But one market they are not tapping into is betting on government elections. No U.S. state currently allows the practice ahead of the 2024 vote.

However, companies such as Sequoia-backed Kalshi, PredictIt and financial tech giant Robinhood offer workaround entries into the market through political event futures contract trading. For now, these trades are overseen by a federal agency, the Commodity Futures Trading Commission (CFTC), but the practice faces accusations of being a form of gambling. Kalshi is in a legal battle with the CFTC, though it could be several months until the D.C. Circuit Court of Appeals hears oral arguments.

By applying futures trading to politics, firms are lapping up revenue, while BetMGM, Caesars, DraftKings, FanDuel and other U.S. betting leaders stay out of the lucrative line of business.

As of Friday, Kalshi has taken more than $142 million in wagers on the presidential election winner and $18 million on the popular vote winner. Those numbers are expected to balloon further before Tuesday’s vote.

On futures trading platforms, users can buy contracts for Donald Trump or Kamala Harris winning the 2024 presidential election at a price set by how much public money has been placed on either side. Each contract is priced at a fraction of $1; as of Friday morning, a Trump victory contract on Kalshi costs about $0.56, giving him an implied 56% chance of defeating Harris.

Users with Trump contracts can either sell each contract as its value changes, or wait until the result is determined and receive a full $1 per contract if Trump wins. If Trump loses, those contract owners get nothing. At its current price, a Trump triumph would pay out about $0.44 per contract in winnings—the difference between a user’s initial payment and $1.

The companies offering these trades make money through transaction fees.

Until recently, the most-sought futures were generally tied to global economic indicators such as oil prices, treasury notes and currency exchange rates, used as a means of hedging against other investments.

Kalshi has hosted more than 185.5 million futures trades on political outcomes since Oct. 4, according to data the company shared with Sportico. It has also cracked the Apple App Store’s top five of free U.S. downloads, advertising itself as a way to “bet the 2024 election,” while simultaneously arguing in court and in a statement to Sportico that it is not a gambling enterprise.

“Kalshi is not subject to state laws on this topic, because we are instead federally regulated and do not offer gambling products,” a spokesperson wrote in an email.

Meanwhile, the popular futures trading service Polymarket, which has raised more than $70 million in two rounds of venture funding, has taken a different approach. It abandoned its offerings to U.S. consumers in 2022 after drawing CFTC scorn, choosing to work exclusively offshore.

Because of its global popularity, Americans still keep a watchful eye on Polymarket data, and some attempt to use software to bypass its location restrictions to place wagers.

Taking Stock of the Surge

Even considering Kalshi’s rapid rise, three employees of major U.S. sportsbooks, who asked not to be identified in order to discuss private company matters, said they were not aware of any imminent plans from their firms to enter the space.

Instead, sportsbook operators only appear interested in offering political bets in the U.S. in classic form or not at all, viewing futures trading as a nonstarter for their business models. In part, that is because they are already grappling with regulators elsewhere.

According to Keith Whyte, executive director of the National Council on Problem Gambling, sportsbooks may fear the reputational damage that could come if they are in the controversial political futures trading mix.

“The online gambling industry right now is dealing with a lot of potential backlash [as it is],” said Whyte, who works closely with sportsbooks to establish responsible gaming standards, in a video interview.

The parent companies of FanDuel, DraftKings and BetMGM do offer straightforward political betting on U.S. elections in countries such as England and Canada. Flutter Entertainment, which owns FanDuel, this year touted its U.K. Betfair Exchange as “a more powerful source of truth” than polling.

There was a brief glimpse of U.S. political betting legalization in 2020, when the West Virginia Lottery said it would allow election bets. FanDuel posted presidential odds before state officials reversed course and shut down the market about an hour later.

Since then, political betting—and because of the stateside ban, political event trading—has piqued mainstream curiosity in the U.S., driven in part by the rise of sports gambling, experts said.

Publications devoted to keeping sports bettors informed now publish frequent columns about the latest election odds to meet reader interest.

“Betting is a lens that they apply to more and more things throughout their life, right?” said Andrew Lynch, who has led online betting content production at Fox Sports, the Action Network and Better Collective in recent years and worked on political campaigns before joining the media industry. “You get more comfortable with betting. … It just becomes a different way of looking at things. It becomes very normal in your day-to-day life.”

Lynch, a self-described political betting aficionado, added that sports wagers have made putting money on non-sports outcomes seem less absurd to the average person. Sports odds are plastered everywhere, from live TV broadcasts of championship games to social media. They easily translate to other aspects of life, including elections.

In the stretch run before the 2024 election, Kalshi is running advertisements on digital media networks with messages such as, “Bet $100 on Trump, Get $175,” blending in with the marketing strategies sportsbooks often use to prompt wagers on athletic events.

“People are more comfortable and conversant in betting and what the odds mean,” Lynch said. “They now have a better understanding. … All of a sudden, they go, ‘Oh, Harris is +130, I know what that means,’ in a way that they didn’t know four years ago.”

A Fight for the Futures

While states oversee gambling, the federal CFTC regulates trading on event futures. Its rule-enforcing authority is broadly outlined by the Commodity Exchange Act, last updated by Congress in 2010.

The act enables the CFTC to nix futures for several reasons, including when they relate to “gaming.” Whether “gaming” includes “gambling”—and whether Kalshi’s political futures trades fall under either of those terms—is a semantics tussle that is a critical part of ongoing litigation between the U.S.-based company and the CFTC.

Citing its similarity to gaming and its potential threat to public interests, the CFTC shut down Kalshi’s politics-related trades in 2023. Kalshi sued the CFTC to regain its right to offer political trading, arguing the practice is neither gambling nor gaming, and U.S. District Court judge Jia M. Cobb ruled in the company’s favor in September.

The way Congress worded the Commodity Exchange Act has hurt the CFTC in court so far, said Mark Wetjen, a former commissioner and acting chairman of the agency who is now a partner at Dentons law firm.

“[Congress] understood what gambling was, but they didn’t actually, specifically say ‘gambling’ in the statute, and rather, they just said ‘gaming,’” Wetjen said, highlighting a key component of the District Court judge’s opinion summary when ruling in Kalshi’s favor.

After the District Court sided with Kalshi in September, the D.C. Circuit Court of Appeals denied the CFTC’s emergency stay that would have prevented political trades through the 2024 election. As a result, the political futures market resumed activity in early October in the wake of Judge Cobb’s ruling and the D.C. Circuit Court denial, causing a spike in trade volume.

The Circuit Court has agreed to hear the CFTC’s appeal, potentially this December, at which point 2024 election voting will already be completed.

With big-time financial players like Robinhood now involved, adding to the frequency of political futures being bought and sold, the stakes are increasing in the final days before the election. Robinhood did not respond to comment for this story.

Among the critics of the District Court enabling election-related trading is Cantrell Dumas, the director of derivatives policy at Better Markets, a nonprofit advocacy group for investor protection in finance. “[It] ignores the spirit of the Commodity Exchange Act and the very real threats of market manipulation and election interference,” Dumas wrote in a recent blog post.

Wetjen said the Circuit Court’s decision regarding the CFTC’s appeal will set the table for how the federal agency proceeds. If Kalshi triumphs again, Wetjen said he would anticipate that the CFTC might “go back to the drawing board.”

Down the road, Congress, other federal agencies or even individual states could scrutinize political event futures trading using different legal approaches, with the alleged parallels to gambling ripe for examination as federal legislators have signaled eagerness to crack down on the betting industry.

In September, U.S. Rep. Paul Tonko (D-N.Y.) and U.S. Senator Richard Blumenthal (D-Conn.) introduced a bill in the House of Representatives and the Senate that would require states to gain approval from the Justice Department to offer legalized gambling. It is called the Supporting Affordability and Fairness with Every Bet (also called “the SAFE Bet Act,” H.R. 9590 and S. 5057), and it includes stricter consumer protection guardrails for sportsbooks to stay between than most states have created.

A spokesperson for Tonko said in an email that their office is actively monitoring whether to add stipulations that cover political betting. The spokesperson did not rule out a potential amendment to the proposed legislation addressing the issue, but noted it is too early to provide a definitive answer.

Congress could also consider a separate bill focused exclusively on election betting.

“Unless there’s a regulatory floor that everyone has to meet, companies can be discouraged from investing in responsible gambling [measures],” Whyte said. “That’s a cost to them, and they are competing with people who don’t.”

As Kalshi and fellow upstarts can amass new customers quickly, free of CFTC oversight and outside the purview of state gambling regulators, the sportsbooks are on the sidelines.

What’s at Stake?

Depending on where future court rulings and legislation lands, billions of dollars in potential wagers on political outcomes could continue to go to future-trading platforms, as is the case now, or alternatively land in the hands of sportsbook operators.

Of course, there is also possibility that the U.S. will institute federal bans on both political futures trading and political betting through sportsbooks. In that case, U.S. citizens could try to circumvent location restrictions to use popular offshore services like Polymarket.

Proponents of political betting and futures trading have said their results can provide a useful public signal akin to polling of where a race stands, and they argue wagers happen anyway and may as well be brought above the table.

Skeptics see political wagers as a double danger: Not only are they associated with gambling addiction risks, but the political component presents a threat to democratic function, according to the CFTC.

The CFTC declined a request for comment for this story, but it has outlined its views in multiple public filings.

Without regulation of political futures, advocates worry that companies will have little incentive to protect consumers. And as long as companies claim election futures are not a form of gambling, they are sending a message to users that what they are offering is more skill than chance.

“There are a lot of people involved in special election betting who because they’ve been told that it’s legally not gambling, they also assume they are not subject to the psychological impacts of gambling,” said Whyte, whose National Council on Problem Gambling views political futures as virtually indistinguishable from betting. “They’re less prepared going into these trades and election bets to protect themselves. And then if they do develop a problem, they have a lot less access to [safety] tools.”

FanDuel and Fanatics representatives declined to speak on the record for this story. BetMGM did not respond to a request for comment.

In a statement, a spokesperson for DraftKings wrote: “We are dedicated to providing a legal, regulated, engaging platform that prioritizes integrity and responsible gaming, standing in stark contrast to the risks posed by illegal and unregulated offshore operators. While we recognize the demand for election betting, current regulations restrict legally offering these wagers in the U.S., which can lead consumers toward illegal offshore platforms where election betting is readily accessible.”

Even without the big sportsbooks, what was once a fringe pastime has entered everyday discourse—and interest in political bets and trades is likely grow. “It’s only getting bigger,” Lynch said.

Michael McCann contributed to the reporting of this story.