Tuesday afternoon, the day of the election, as I was driving home from school, a billboard caught my eye (are you starting to see a pattern)? The billboard said, “Put your money where your mouth is” and had Trump colored in red on one side and Harris, colored in blue, on the other. Each candidate had a percentage next to them, Harris’s 47% and Trump and 53%. As I got home and tried to relax with some Instagram reels, my feed overflowed with ads for a site called Kalshi. The same line read “Put your money where your mouth is, bet on the election.” My curiosity piqued, I clicked the link to see what all the hubbub was about.

Betting and prediction markets are not new things in the history of U.S. elections. Prediction markets, a system where people can bet on the outcome of future events by buying and selling contracts, have been around since the mid-1500s. There are two stocks, one for the affirmative and one for the negative chance of an event. The stocks’ values are determined based on the collective beliefs of the people in the market on what will happen. There was a time from 1868 to 1940 in which election betting among U.S. citizens was very popular. At the height of its popularity during the election of 1916, the market was valued at $290 million in today’s dollars. Then, through the 1920s and 30s, election betting fell out of popularity due to moral concerns and worries about election manipulation. Legislation was implemented in New York to limit and ban betting, and it spread to the rest of the states. For over 80 years election betting remained illegal to American citizens. That is, until a few weeks ago.

The Commodity Futures Trading Commission, which regulates financial contracts that bet on events, has consistently blocked applications to open up bets on elections. But last month when a U.S. district court sided with Kalshi in a lawsuit the company filed against the CFTC, arguing that it should be allowed to offer the contracts, that all changed. The ruling cleared the way for Kalshi and other sites to open up betting markets on the election while the CFTC appeals.

Since I’m not 18 and I couldn’t convince any of my friends or family to lend me their social security number, I couldn’t actually participate in the frenzy of election betting. But as election night went on and polls began to close, I watched as Trump’s stocks gradually climbed, and the betting pool reached astronomical amounts. By the end of Election Day, Polymarket saw over $4 billion in bets, while Kalshi had over $500 million. Kalshi and Polymarket also became the top two free apps on the Apple App Store. The sites treat betting like stock. As Trump’s chances of winning went up based on betting, his stock value went up. The amount of money you are allowed to bet on Kalshi is capped at $100 million. That’s in very stark contrast to most sports betting sites which have a cap of $500,000. When the election is called, the winning betters receive their payouts.

There is a lot of controversy related to the legitimacy of some of the betting on these sites. Researchers raised red flags regarding signs of wash trading on Polymarket. Wash trading is when the same people buy and sell repeatedly, giving the illusion of more market activity than there actually is, and it is illegal in the United States. There was also a mysterious trader, dubbed the “Trump Whale,” who put $30 million in different bets in favor of Trump winning the election and is expected to receive a payout of nearly $85 million. This artificially raised Trump’s stock and created a surge of Trump stock buying afterward. During an interview, Trump Whale said he had no political agenda or intention of swaying the election, but still, it has opened up conversations about what effect election betting has on the outcomes of elections.

As there is no quantitative data, it is hard to make a case that election betting influenced the election, but it’s easy to imagine how it could. Suddenly, when the prospect of winning money is involved, there are more external influences weighing in on how people vote. Athletes aren’t allowed to make bets on their own games for a reason. Although the election is a much larger game with millions of players, the same logic holds true. Elections are the backbone of our democracy and society. It seems like a mockery and disgrace to allow betting to happen on something with such importance. I fear that as our country becomes more divided, people increasingly participate in politics as though they are supporting their favorite sports team.

Election betting opens up a bigger conversation on the ethics of prediction markets. Since the election, Polymarket and Kalshi have moved on to other betting polls. The top trending polls on Polymarket right now are “Trump ends Ukraine war by first 90 days” and “Trump nominates Elon Musk to cabinet,” with a combined market value of over $2 million. A risk is that incentives may begin to form for politics to sway one way or another depending on the market. Insider trading is a huge problem for online prediction markets. If you have inside information on how an event might turn out, like if you happen to be Trump for example, you gain a massive advantage in the betting market. There seems to be something very twisted about betting on world events. It monetizes situations and crises that are affecting real people. Polymarket’s betting polls put the chances of Israel pulling out of Gaza at 33% and the chance of an Israeli military strike on an Iranian nuclear facility in 2024 at 36%. These aren’t just events that you’re betting on, they’re people’s lives.