Prediction markets open new front for US election misinformation

WASHINGTON

U.S. President Donald Trump delivers remarks during a campaign rally at Crossroads Arena on October 26, 2026 in Corinth, Mississippi. Trump is in Mississippi today to continue campaigning for Republican candidates ahead of the midterm elections. (Getty Images via AFP)

The U.S. midterms are playing out against a controversial new scoreboard, as the nation votes in its first major elections since prediction markets went mainstream.

With hundreds of millions of dollars on the line, experts are warning that the proliferation of live odds into news coverage and on social media could sow confusion — and provide fodder for misinformation.

Concerns range from motivated actors taking extreme measures to sway markets, to voters overtrusting the odds and baselessly blaming fraud where election results differ.

President Donald Trump has already made unsubstantiated allegations of fraud central to his political movement ahead of the November 3 vote.

Polymarket and Kalshi are allowing users to buy and sell contracts on thousands of outcomes related to the midterms, despite surveys showing most Americans oppose betting on elections.

The companies have also partnered with prominent news organizations.

"They're more and more becoming part of how Americans understand elections," said Davina Hurt, government ethics director at Santa Clara University's Markkula Center for Applied Ethics.

"Elections are not games," she told AFP. "My concern is that we've reached a point where financial market expectations carry more weight in the public's mind than the votes themselves."

Prediction market trading has surged amid legal battles over whether they should be regulated as federal commodities or under state gambling laws.

Kalshi said its markets offer unique data distinct from polling, that probabilities do not guarantee outcomes and that efforts to manipulate odds are canceled out by other buyers.

"Kalshi should be seen as a complement to traditional polling," head of communications Elisabeth Diana told AFP. "On prediction markets, you trade what you think will happen. On polls, you say what you want to have happen."

Yet experts expressed fears over markets being misconstrued, especially as Polymarket and Kalshi issue race "projections" on social media.

A high probability "is not a promise," Hurt said. "When the prediction fails, that's not evidence that elections fail. But people are going to read that in."

When Republican Spencer Pratt lost the Los Angeles mayoral primary in June, right-wing influencers pointed to prediction market odds which showed him favored to advance to the general election as evidence of fraud.

Some X posts spreading misinformation carried “paid partnership” tags, prompting backlash and action from Polymarket and Kalshi.

“The June primary reinforced how quickly expectations about election outcomes can become confused with actual election results,” said Michael Sanchez, spokesman for Los Angeles County’s registrar’s office.

For the first time, researchers who monitor election misinformation at University of Washington's Center for an Informed Public are tracking how prediction markets are misrepresented online.

"There's more reason to create these rumors because there's that sort of financial element tied to it," senior research scientist Rachel Moran told AFP.

"It's becoming a significant part of our work."