SAN FRANCISCO — Eric Swalwell has made a habit of posting and sending out screenshots of his betting odds in the race for California governor.
The Bay Area Democrat has every reason to keep at it, holding frontrunner status on the most popular prediction markets, Kalshi and Polymarket, for months.
But he’s hardly alone in tracking performance on the platforms, where millions of dollars are flowing, and politicians are starting to promote wagers — alongside more traditional metrics like polling and fundraising — to demonstrate momentum in the midterms.
“This cycle, it’s basically all I hear about from all my friends who are running for office around the country,” said former Rep. Sean Patrick Maloney, the New York Democrat who was Swalwell’s colleague in the House and now leads a coalition representing Kalshi and competitors in the prediction markets space. “It’s become a big part of the way candidates describe where they sit, how they’re doing.”
Just as prediction markets have taken off for national contests, calling President Donald Trump’s victory in 2024, and for pop culture predictions, like those around the Super Bowl, the wide-open race for governor in the country’s most populous state is emerging as a new front for betting — while raising alarms over the risk of insider trading and the nascent industry’s proximity to Trump.
In recent months, users have poured more than $3 million into Kalshi bets for political events like “California Governor winner” and “California Governor primary advancers,” where Swalwell is clearing 60 percent. Traders have thrown another $470,000 and counting behind similar contracts on Polymarket, the world’s largest prediction market.
If the 2024 presidential contest was the first U.S. election to test prediction platforms on a large scale, Anna Welding, who is running for a California House seat, sees the governor’s race as replicating that dynamic.
“It’s such big money being thrown at this campaign that they are treating it like a presidential election,” she said. “They will bring every product into it that they absolutely can.”
In a sign of their significance, Democratic consultant Paul Mitchell, one of the most widely respected political data experts in California, included Polymarket data when he created a simulator to game scenarios for California’s top-two primary.
Compare the spike in activity to 2022 — when Gov. Gavin Newsom sailed to reelection and prediction market players were up against a more hostile regulatory landscape.
“I don't remember a single conversation during that two-year cycle about someone’s Kalshi odds,” Maloney, who was chair of the Democratic Congressional Campaign Committee in 2022, told POLITICO.
Starting that year and through 2025, Polymarket shut out U.S. customers under a settlement with the Joe Biden-era Commodity Futures Trading Commission, which accused it of running an unregistered trading platform. Kalshi didn’t open betting for election outcomes until the fall of 2024 due to its own legal setbacks.
In a statement to POLITICO, a Swalwell campaign spokesperson called the platforms “a data point,” confirming it tracks “polling, prediction markets, and most importantly, on-the-ground sentiment from our engagement with voters.” Swalwell and billionaire Tom Steyer have surged lately in traditional polls.
Industry representatives say their forecasts are more accurate than polls or pundits because the sheer volume and pace of trading let prediction markets adjust to give feedback in real time — and because traders have money on the line, they’re incentivized to put aside personal views. Several of the candidates POLITICO spoke with about prediction markets also raised the flaws of polling.
At the same time, the sums that they’re bringing into play for elections have intensified backlash against the companies. Gubernatorial candidates Antonio Villaraigosa and Betty Yee both vowed to pursue regulatory action that could restrict betting on the platforms should they win.
Yee said she considered their presence “a little bit of an undermining of democracy.”
The criticism reflects a broader, mounting scrutiny of the prediction market industry over insider trading accusations, its influence on the democratic process and, from Democrats, associations with the Trump family.
The Trump family entered the business by announcing it would bring prediction market features to Truth Social. Donald Trump Jr. is an adviser to Polymarket and Kalshi. His VC firm, 1789 Capital, also invested double-digit millions of dollars into Polymarket last summer.
“Look at who’s behind these platforms. You've got Trump Jr,” Yee said. “I definitely would want to take action to be sure that they're regulated.”
Newsom’s own glowing performance on Kalshi — where he leads Democrats vying to be the 2028 presidential candidate — has not tempered his concerns about the possibility of insider trading.
“There was some prediction market [for] how many times I was going to say the word Trump in a speech, and I knew exactly the answer to that, and I guess legally, I could have bet,” the governor said Thursday, telling reporters “that’s an issue that you may all want to take a look at … that whole space.”
A California state Assemblymember, Republican Kate Sanchez, recently introduced a bill that would bar public officials, political candidates, government employees and lobbyists who possess insider information from betting on prediction markets.
“The 2026 governor’s race is already crowded and unpredictable. If someone with insider knowledge starts betting on political outcomes, it could create the appearance of a 'favorite' or unfairly shift public perception,” she told POLITICO. “That could damage trust in the election process.”
In response to the backlash, American platforms such as Kalshi have tried to distance themselves from less-regulated offshore companies like Polymarket. Kalshi pushed back on Newsom Thursday by highlighting those differences.
Kalshi’s head of enforcement and legal counsel, Bobby DeNault, said in an interview that its rules do not allow candidates or their staff to bet on the election — restrictions that were listed on the gubernatorial election markets POLITICO saw.
“In the event we ever see a candidate trading on their own candidacy, it triggers disciplinary action on the exchange,” he said. “Their trade gets frozen. They may be permanently suspended from having an account.”
In California, there’s another factor that clouds how long the markets may last. The sector is on steadier footing with federal regulators since Trump took office. But their ability to keep operating in certain states is now tied up in an unresolved states-versus-feds legal fight that has recently heated up and scrambled party lines.
Leaders in both red and blue states have likened prediction markets to shadow casinos and sportsbooks, offering the services in disguise where they’re barred or would otherwise require approval. Several have issued cease-and-desist orders against Kalshi, Crypto.com and other companies.
After CFTC Chair Mike Selig, a Trump appointee, took the platforms’ side last week, claiming his agency has exclusive jurisdiction over prediction market platforms and telling states to back off, Republican Gov. Spencer Cox said they had no place in Utah. He vowed to use every resource at his disposal to beat Selig. Connecticut Gov. Ned Lamont, a Democrat, pushed a proposal for limits on prediction markets this month.
How the courts decide to treat prediction markets is important because online sports betting — which dominates as their primary and fastest-growing use — is not legal in many states, including California. Industry players counter that prediction markets are federally regulated financial exchanges, not sportsbooks, and can exist outside state licensing rules or bans.
Villaraigosa accused prediction markets of violating the state gaming compacts that California has negotiated with Native American tribes. His opposition is notable, as he’s also an adviser to Coinbase, one of many crypto companies that have stepped into the prediction market business.
“Without question, they violate the state gambling ban, and they're trying to get cute and go around them,” the former Assembly speaker told POLITICO. “That's why I believe they need to be stopped.”
But for now in California, prediction markets are continuing to benefit from the wide-open nature of the gubernatorial race, with a stream of newcomers in recent months and no obvious frontrunner.
Traders “would find it interesting to be participating at the early stages of a market that might develop over time,” said DeNault.
At the state Democratic Party convention this past weekend, several gubernatorial contenders running behind Swalwell in the prediction markets — including those who have fared better on the platforms than in polls — told POLITICO they don’t take the results seriously.
“I haven’t been focused on it. I’ve had people send me the screenshots,” said Matt Mahan, mayor of Silicon Valley’s largest city and a recent entrant in the governor’s race who has occupied No. 2 on the sites since announcing. “But I’m not trying to follow a poll or a prediction market.”
Steyer flatly said “no” when asked if he checks or puts any stock in the sites.
The convention ended without any candidate coming close to winning enough delegate support for the party endorsement. Some candidates had also said that the longer the race stays unresolved, the more appealing the platforms may become as a tool to drive perception.
Ian Calderon, a former state lawmaker and longshot contender for governor, said that while he doesn’t “look at the prediction markets at all,” viewing them as another way to try and sway public opinion, he might not rule it out if he were in some other candidates’ position.
“Eric Swalwell’s in a moment where he’s trying to consolidate,” he said. “I wouldn’t say that it wouldn’t be something that if I was leading, I might use to my own advantage.”
Tyler Katzenberger contributed to this report.
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