Election Betting Is Going Mainstream After Major Brokerage Gets on Board

Starting Monday, Interactive Brokers plans to allow its users to place wagers on whether Vice President Kamala Harris beats former President Donald Trump in November, the company’s founder and chairman Thomas Peterffy said in an interview. 

Interactive Brokers expects to follow up by allowing similar wagers on swing-state Senate races, Peterffy added.

Peterffy’s announcement came hours after a judge denied a last-ditch attempt by the Commodity Futures Trading Commission to prevent a startup trading platform from launching a betting market on congressional elections.

U.S. District Judge Jia Cobb of the District of Columbia ruled Friday that the CFTC had overreached last year when it blocked the startup, called Kalshi, from launching the congressional-control markets. 

The CFTC—which has argued that such betting markets were unlawful and could harm the integrity of U.S. elections—filed an emergency motion to block Cobb’s ruling from taking force. 

In a hearing Thursday morning, the judge rejected the CFTC’s arguments and cleared the way for Kalshi’s launch. The CFTC appealed her ruling immediately after the conclusion of the hearing.

Critics of election betting, including some Democratic politicians and liberal groups, say it could warp voters’ incentives and encourage bad actors to manipulate elections for financial gain.

“When big bets are cast on elections and dark money can smear candidates, you have the perfect combination of factors that can undermine trust in our democracy,” Sen. Jeff Merkley (D., Ore.) said in a statement, adding that the court ruling was “deeply damaging to the integrity of our upcoming election.”

Proponents say election-betting markets can provide useful, real-time insights into the dynamics of an election. 

The current presidential race has led to a huge surge of activity at Polymarket, a crypto-based prediction market whose users have placed hundreds of millions of dollars of bets on the Harris-Trump race. Polymarket is off-limits to Americans under the terms of a 2022 settlement with the CFTC. 

Two election-betting markets went live on Kalshi’s website shortly after Thursday’s hearing concluded, tied to whether Democrats or Republicans win control of the House and Senate in November. The debut means that Americans can now legally place bets on elections on a regulated U.S. marketplace.

“Now is finally the time to allow these markets to show the world just how powerful they are at providing signal amidst the noise and giving us more truth about what the future holds,” said Kalshi co-founder and CEO Tarek Mansour.

But the coming launch on Interactive Brokers—which, with over three million client accounts, is much larger than Kalshi—would open election betting to a far broader customer base.

Interactive Brokers’ election contracts will be part of its newly launched prediction market, ForecastEx, which made its debut earlier this summer. ForecastEx allows users to buy “yes” or “no” contracts in response to a particular question, and users who are proved correct in the end receive $1 per contract. Contract prices range from 2 cents to 99 cents and fluctuate depending on what users are willing to pay for that outcome.

So far, ForecastEx’s questions have been limited to the economy and climate. Once political contracts go live, prices on ForecastEx will reflect how market participants assess the probability of a candidate winning a particular election.

Peterffy said Interactive Brokers is planning to purchase digital ads on The Wall Street Journal’s website and on X, the social-media platform, that stream live prices from its new election-betting contracts. Viewers of those ads would then see in real time how the candidates are faring, in the opinion of ForecastEx bettors.

Currently, only users of Interactive Brokers can access ForecastEx’s markets, but the company is working on connecting it to other brokers, Peterffy said.

Write to Alexander Osipovich at alexo@wsj.com

The 2024 Election

What's shaping the race for the White House, selected by the editors

Five Debate Moments That Mattered Most

An Annotated Fact-Check and Analysis of the Debate

Republicans Frustrated With Trump, Moderators

Molly Ball: Harris Defined Herself—and Trump

Comparing the Candidates on Key Policies

Taylor Swift Endorses Harris

Why Pennsylvania and Georgia Are Must-Win States

Can You Guess Which Brands Democrats and Republicans Love?