Suspicious election contract trading on prediction markets
CNBC examines how massive wagers on LA mayor race and congressional contests may be manipulated, with price spikes influencing voter perception and raising integrity concerns.
At a glance
- Spencer Pratt appeared favored in the June 2026 LA mayoral primary with over $47 million wagered, yet finished third despite a 78% market odds.
- ACDC found 23% of $100k+ congressional markets on Kalshi and Polymarket experienced price spikes of 30 cents or more, exemplified by an $8k bet that lifted Juliana Stratton’s odds to 99 cents before h
- Voters are 10‑20 points more likely to trust a candidate’s chances when prediction markets favor them, prompting platforms to add transparency tools and regulators to monitor manipulation.
**Los Angeles, June 2026 –** Spencer Pratt entered the Los Angeles mayoral primary as the apparent favorite after millions poured into prediction‑market contracts. Over $47 million was wagered on the race, making it the most heavily traded mayoral contest of the year. One market gave Pratt a 78% chance of advancing to the November runoff, yet he finished third.
Dean Logan, registrar‑recorder for the Los Angeles County Clerk’s Office, warned that “prediction markets can add to that confusion when people treat their projections as more authoritative than the actual votes being counted.” The failure of the markets to forecast Pratt’s defeat has spotlighted the risk that traders can inflate a candidate’s odds and mislead voters.
How price spikes work Kalshi detected a sharp price spike in Pratt’s race after a single trader spent $1.25 million on “Yes” contracts. The price jumped from 29 cents to 45 cents within seconds, then reverted to earlier levels by the end of the day. Robert DeNault, Kalshi’s head of enforcement, said rational traders quickly bring prices back to fair value.
ACDC’s analysis of the same event showed that extending the view to three hours after the spike left the price three cents higher for about two hours before correcting. Across 167 congressional markets worth more than $100 k, 38 (23%) experienced spikes of 30 cents or more, according to ACDC.
Real‑world examples A notable spike involved the Kalshi contract on Juliana Stratton’s Illinois Senate nomination. On March 3, a buyer spent $5 k, pushing the price from 47 cents to 79 cents. After a brief dip, the price surged to 99 cents following an additional $3 k bet. The contract eventually settled at 52 cents—5 cents above its starting point—while Stratton won the Democratic primary two weeks later.
A study funded by the Brennan Center for Justice found that voters are 10‑20 percentage points more likely to believe a candidate will win when prediction markets favor that candidate, regardless of traditional polls. This influence persists even though platforms report that viewers outnumber active traders 5‑to‑1.
Platform safeguards and concerns Kalshi and Polymarket now label low‑volume markets, display live trade feeds, and run election‑specific surveillance systems. Both are regulated by the CFTC and collect KYC data, yet external investigators cannot easily trace individual traders without subpoenas.
Chainalysis partners with Polymarket International to track suspicious activity. The firm helped identify Gannon Ken Van Dyke, a soldier accused of using classified information to bet on geopolitical events, by linking his crypto wallets to identity‑verified exchanges.
Despite safeguards, ACDC notes that 88% of 18 000 active congressional markets could have their odds moved by 10 cents with a single wager under $1 000, highlighting the ease of manipulation in low‑volume contests.
Source: CNBC
Questions and answers
- How do prediction markets influence voter perception?
- A Brennan Center study shows voters are 10‑20 points more likely to believe a candidate will win when prediction markets favor them, regardless of polls.
- What safeguards exist to prevent manipulation?
- Kalshi and Polymarket use algorithms to flag unusual activity, provide live trade feeds, label low‑volume markets, and are regulated by the CFTC; they also partner with analytics firms like Chainalysis.
- Can price spikes be sustained?
- Short spikes often revert quickly, but ACDC found some can last hours and shift odds, raising concerns about misinterpreted market sentiment.
