Is the US Ready For Election Betting?

Election betting is a massive market, but it is (almost) completely off-limits in the US, and while some are challenging the status quo, it is unlikely to change anytime soon.

Legal sports betting has swept across the US, and US bettors can now bet on everything from the NFL and NBA to more niche markets like eSports and Pickleball. But there is a massive market that is still (mostly) off-limits: Election betting.

Even though it’s prohibited in the US, the presidential election is a Super Bowl-level event for bettors.

Per USA Today, In the leadup to the 2020 election, “more than $1 billion is expected to change hands, Matthew Shaddick, head of political betting at British sports betting and gambling firm GVC, told Agence France-Press last week.”

There is also plenty of action in offshore markets, with USA Today stating, “Offshore book Betonline.ag said last week the election has surpassed the Super Bowl in terms of dollars bet and will be the biggest decision in the site’s history since the Floyd Mayweather-Conor McGregor boxing bout in 2017.”

So why is the legal US market sidestepping the opportunity?

It’s complicated.

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Brief History of Election Betting in the US

Election betting is prohibited in most states by law, and it also falls under the purview of the Commodities Futures Trading Commission (CFTC), which categorizes most forms of political betting as a futures market.

There are two places a US resident can go to place a legal wager on US elections: PredictIt and something called the Iowa Electronic Markets, the oldest legal election betting platform in the country. However, neither is a full-fledged sportsbook. They are, by and large, research tools run by universities.

Per the National Review:

“The CFTC allows political futures trading in limited circumstances. In a 1993 “no action” letter, it promised not to prosecute the Iowa Electronic Market — America’s only political gambling market, which is run for research purposes by the University of Iowa — so long as bets were limited, the scheme served a research purpose, and the management was purely academic.

“The CFTC granted another “no action” letter to a New Zealand university in 2014, allowing a slightly less restrictive operation called Predictit. But it prohibited a larger operation [NADEX] from listing political outcomes as tradable events. The CFTC so far appears to favor research applications and a lack of profitability in selecting organizations to exempt.”

The CFTC rescinded PredictIt’s no-action letter in 2022. PredictIt recently won an important court case, with Law Professor John Holden opining that “now we go back to waiting to find out what the CFTC is going to do. In the meantime, PredictIt will continue operating.”

15 Minutes in April

There was, for about 15 minutes, a third place you could place a political bet in the US, the FanDuel Sportsbook in West Virginia on April 7, 2020.