People are betting on elections in prediction markets. Congress is watching

This is read by an automated voice.Please report any issues or inconsistencies here.

WASHINGTON — As Spencer Pratt fell behind in the Los Angeles mayoral primary, an unexpected group began claiming election fraud: people tracking the Republican’s success on prediction markets, the increasingly popular online exchanges on which people can make bets on almost anything.“Crazy how much voter fraud can be done with mail in ballots,” one user following bets on the mayoral race wrote last week on Kalshi, one of the top trading platforms.“Same old California fraud,” said another who had bet that Pratt would win.Election fraud claims extended to social media, where a handful of influencers who post content for prediction market platforms questioned the ballot count.

“It’s a dead heat on Kalshi,” one user wrote on social media.“Is CA cheating to get Spencer Pratt out?”Kalshi told the influencers to delete the posts, which violated company guidelines.

Polymarket, the other leading platform, directed them to remove the paid partnership label from those posts.The amplification of election misinformation by users who had money staked on the mayoral race adds a new twist to evolving scrutiny of prediction markets, and scholars say the ability to bet on elections broadly raises questions about whether the exchanges could alter how Americans engage in democracy.“Elections are not a game,” said Davina Hurt, director of government ethics at the Markkula Center for Applied Ethics at Santa Clara University.“[If market] probabilities begin influencing donor decisions, media attention, the energy around [campaign] volunteers — at that point, markets aren’t just observing the election.

They’re a part of it.”Fans of the exchanges say they are powerful tools that can help decision makers, and company leaders have touted them as highly accurate predictors that can act as an antidote to misinformation and provide election insights.“By shifting focus ...