US midterm prediction markets near $1bn in volume as NBA restricts props and CFTC defends swaps proposal

Event contracts tied to the 2026 US midterm elections have grown sharply in popularity. According to CNN, more than $750 million in notional volume had been traded on the platforms as of 15 October, nearly eight times the amount traded on Congressional and state races in 2024. That year, Americans traded only $92.4 million on election contracts outside the presidential race.

The Anti-Corruption Data Collective counts more than 21,000 midterm offerings across Kalshi and Polymarket. The nonprofit research group estimates that trading on the races could reach $1.6 billion once the midterms are complete. Polymarket CEO Shayne Coplan has described the 2024 presidential election as an inflection point for the industry, noting on a Netflix documentary that the markets gained credibility after giving Donald Trump odds of around 58% on Election Night.

In sports, the NBA and its official sportsbook partners reached a deal on Friday to ban a subset of prop wagers, ahead of the regular season opener next week. Under the policy, sportsbooks will not offer props on individual stats for players expected to play fewer than 12 minutes in a game. Customers will also be barred from combining multiple unders on the statistical performance of one player. The league is dealing with a series of scandals involving prop manipulation, with several former players set to stand trial in the coming months.

The restrictions do not extend to prediction markets. The source noted that Polymarket still offered a three-leg combination on under bets for one player, while Kalshi did not list under combos for NBA games as of Friday night. The NBA has held formal talks with the US Commodity Futures Trading Commission on an integrity framework for basketball event contracts but has not yet signed a Memorandum of Understanding. NBA executive vice president Scott Kaufman-Ross told ESPN that prop restrictions could be difficult without such a deal.

On the regulatory side, the CFTC issued a Notice of Proposed Rulemaking on 9 October for a broader definition of financial swaps. If approved, event contracts on sports and politics would be classified as swaps. The agency maintains it has exclusive jurisdiction over such derivatives, while a majority of state attorneys general disagree, which could set up a Supreme Court battle. Several appellate courts have already rejected the idea that sports derivatives preempt state sports betting laws.

CFTC Chair Michael Selig said in a Fox Business interview that the Commission is focused on curbing insider trading, wash trading, fraud and other manipulation. Bloomberg reported that the CFTC and the Justice Department are examining $2.6 billion in suspiciously timed oil trades, while the Wall Street Journal reported that the CFTC looked at about $5 billion in Kalshi trading linked to bitcoin perpetual futures. Kalshi denies any wash trading allegations.