With midterm elections approaching, election betting is drawing growing scrutiny from state officials, including in Wisconsin, where the Elections Commission warned voters in July not to wager on election outcomes through platforms such as Kalshi and Polymarket. The commission cautioned that a Wisconsin resident who bets on an election and then votes in that contest could face a challenge to their voting eligibility in the future. Administrator Meagan Wolfe said in a July statement that voters should understand the potential consequences. The commission did not make Wolfe available for an interview. The warning comes as prediction markets offer contracts on individual races and questions such as which party will control Congress. On Friday morning, Kalshi showed the Democratic candidate in Minnesota’s U.S. Senate race with an 87% chance of winning, with more than $1.8 million in trading volume. Polymarket put the Democrats’ chance of winning control of the U.S. House at 90%. State officials and civic groups argue that wagers on elections can undermine public confidence and create incentives to interfere with the democratic process. Twenty-three states fully prohibit election betting, according to an analysis of state laws by the National Conference of State Legislatures and Pew Research Center. “It’s supposed to be a civic duty where people are deciding what candidate they actually think is best for a leadership position, not what candidate can make them the most money if they bet the right way,” said Benjamin Schiffrin, securities policy director at consumer and investor watchdog Better Markets. The platforms contend that their offerings are financial contracts, not gambling, and that federal law gives the Commodity Futures Trading Commission authority over them. Polymarket said it views prediction markets as subject to a federal framework rather than a patchwork of state rules. Kalshi did not respond to a request for comment. The CFTC has backed the industry’s position. Its sole current commissioner, Michael Selig, said Friday that event contracts are commodity derivatives under the agency’s authority. The commission also unveiled a proposed rule that would expressly define event contracts, including political ones, as swaps. The agency’s proposal would continue to allow election trading. Sixteen civic watchdog groups, including Better Markets, Common Cause and Citizens for Responsibility and Ethics in Washington, urged the CFTC in July to prohibit election-related contracts. They warned that election betting could encourage interference and threaten democratic integrity. States have taken different approaches. Minnesota lawmakers passed a near-total ban on prediction markets earlier this year, but a federal judge halted it before it took effect, finding that federal law likely preempts the state’s restrictions on many of the contracts. Minnesota state Rep. Emma Greenman, who helped lead the effort, said decisions about whether to allow betting should rest with state residents. Arizona Attorney General Kris Mayes filed criminal charges against Kalshi in March, alleging the company accepted illegal wagers from Arizona residents, including bets on the 2028 presidential race and state contests in 2026. A federal judge later halted the prosecution, ruling that Kalshi was likely to show that federal law gave the CFTC authority over the contracts. The broader dispute over state and federal authority remains unsettled. Federal appeals courts have issued conflicting decisions: the 9th Circuit has sided with states’ ability to enforce gambling restrictions, while the 3rd Circuit has upheld the CFTC’s exclusive authority over event contracts. New Jersey has asked the U.S. Supreme Court to resolve a related dispute over sports betting on federally registered markets. A decision could also clarify states’ ability to restrict election contracts. Maryland election administrator Jared DeMarinis has also warned that election contracts may violate state law. He asked the state prosecutor in July to examine their legality, saying the issue should be addressed before election betting becomes more entrenched ahead of the 2028 presidential race.