An October 2, 2024 federal court appeals court decision may result in some people being disqualified from voting in Wisconsin this November
There was a 15 page decision in KalshiEX LLC v. Commodity Futures Trading Commission, https://media.cadc.uscourts.gov/opinions/docs/2024/10/24-5205-2077790.pdf, by a three-judge appeals court panel. The October 2 ruling claims the bets to be placed through Kalshi’s website are not actually “gambling” in the legal sense of the word.
There are a number of articles about the ruling itself which can be found with a search engine by searching for “Kalshi” or “election betting”. This post is not about the ruling itself, but the implications it has for voters in Wisconsin.
Wisconsin’s state law states the following under 6.03(2):
No person shall be allowed to vote in any election in which the person has made or become interested, directly or indirectly, in any bet or wager depending upon the result of the election.
Section 6.03 is titled “Disqualification of electors.”
The term “election” is defined in 5.02(4) as “every public primary and election”. Subsection 6.03(2) was quoted, with more explanation, in a previous post, https://doorcounty.substack.com/p/elected-officials-in-door-county.
According to a public filing by Kalshi, it appears that the corporation will prohibit, on paper at least, anyone from placing a bet on who will be President or Vice-President who is registered as an elector to vote in the election: https://www.cftc.gov/sites/default/files/filings/ptc/24/10/ptc1002246564.pdf#page=10
The following individuals will be prohibited from trading:
...
All Electors who may cast ballots in connection with the determination of the President and/or Vice-President of the United States
However, the corresponding rules concerning betting over which party possesses “congressional control” lacks this prohibition: https://cftc.gov/sites/default/files/filings/ptc/23/06/ptc0612232834.pdf#page=10
The decision released on October 2 did not approve or disapprove of betting on who will become president. It instead approved of betting over which party will control congress.
Voters will be allowed to place bets over which party will possess “congressional control” but not for a specific race. However, Wisconsin’s law disqualifies not just people who place a direct bet on a particular race, but also those who make a bet which results in an indirect interest in the outcome of the election. It is broadly written and, unlike the October 2 ruling, is not dependent on a definition of the term “gambling”.
Anyone in the state who places a bet with Kalshi over congressional control has an indirect pecuniary interest in each of the individual congressional races within the state, since the people Wisconsin elects to Congress will help determine which party controls it. This disqualifies the electors who place bets with Kalshi over congressional control.
It is a form of election fraud to vote when you are disqualified as an elector. During voter registration process, the paper application form states, https://www.manitowoc.org/DocumentCenter/View/12858/EL-131-Voter-Registration-Application?bidId=,
By signing below, I hereby certify that, to the best of my knowledge, I am a qualified elector, having resided at the above residential address for at least 28 consecutive days immediately preceding this election, that I have no present intent to move, and I have not voted in this election. I also certify that I am not otherwise disqualified from voting and that all statements on this form are true and correct. If I have provided false information, I may be subject to fine or imprisonment under State and Federal laws
The online voter registration form requires voters to select “Yes or “No” under the question,
Are you otherwise disqualified from voting?*
It is accompanied with a “more information” selection which states,
You may not be eligible to vote if you have been determined by a court to be ineligible to vote, are serving a felony, are not a U.S. Citizen, or will not be at least 18 by the time of the next election.
This references the text directly above 6.03(2), that is 6.03(1). 6.03(1)(a)(b) disqualifies electors who have been found by a court to be mentally incompetent and also states that “Any person convicted of treason, felony or bribery, unless the person’s right to vote is restored through a pardon or under s. 304.078 (3).”
6.03(1) has been repeatedly enforced in recent years. https://wisconsinwatch.org/2023/03/election-integrity-voter-fraud-common-infraction-wisconsin/ states that 109 prosecutions of election fraud in Wisconsin “involved people voting or registering to vote before their probation ended”. These occurred from 2012 to 2022.
Because Kalshi is based out of New York City, it should be possible for prosecuting attorneys to obtain a list of all the people in Wisconsin placed bets over which party controls congress. They could compare that list with records of who voted in order to find people to prosecute.
https://www.votebeat.org/wisconsin/2024/06/10/ineligible-voter-list-fails-to-screen-out-felony-probation/ describes a man from Watertown who voted in 2020 while being disqualified under 6.03(1)(b). He “pleaded no contest and was ordered to pay $1,150, plus attorney fees.”
Kalshi is geared towards individuals rather than large trading firms. I was unable to figure out how many customers it has, but was able to find some things which start to give a rough sketch of its size.
https://research.contrary.com/company/kalshi states that as of December 2023, it had 4 million in ongoing betting contracts. https://kalshi.com/blog/article/liquid-prediction-markets-are-finally-here states that “Kalshi’s active customer base has grown by 5x, exchange volume is up by 50%” from the beginning of 2024 to the time this post was written.
https://www.similarweb.com/website/kalshi.com/#overview describes its website as having had 227,000 visits during the preceding month. The demographics indicate that the people visiting its website are predominately male, with the largest age demographic being from 25 to 34. This is a demographic segment which leans Republican.
The number of active Kalshi customers in Wisconsin between now and the fifth of November may number into the thousands. How many will place bets over congressional control, and then go vote in the fall election? Maybe they won’t even know that they are committing a crime which could cost them a fine of over a thousand dollars.
The potential for an above-average number of disqualified electors casting ballots could lead to court challenges over the outcome of some of the races within Wisconsin. The degree of potential trouble raises the question of what will happen next. Some possibilities:
The federal court system will reverse course and again prohibit election gambling before the election.
The Wisconsin legislature will vote to repeal 6.03(2).
The Wisconsin Supreme Court will strike down 6.03(2).
Wisconsin Attorney General Josh Kaul or the Wisconsin Elections Commission will issue guidance prior to the election claiming that 6.03(2) doesn’t apply to bets placed with Kalshi. The WEC’s authority is described in 5.05(1)(f) as “interpreting or implementing the laws regulating the conduct of elections or election campaigns”. Their authority to reduce the scope of 6.03(2) would be dubious and could result in a court challenge.
Are some state officials comfortable with the trouble? How partisan do they want to be? From a cynically inclined Democratic perspective, it could be kind of nice to prosecute voters for election fraud, when they are disproportionately Republican. That would serve to neutralize arguments by some Republicans that Democrats disproportionately engage in election fraud.
Wondering if partisan purposes could be at fault, I looked through the biographies for the three judges to see whether they were appointed by Democrat presidents or Republican presidents.
Patricia A. Millett — appointed by Obama
https://www.cadc.uscourts.gov/internet/home.nsf/Content/VL+-+Judges+-+PAM
Cornelia T.L. Pillard — appointed by Obama
https://www.cadc.uscourts.gov/internet/home.nsf/Content/VL+-+Judges+-+NP
Florence Y. Pan — appointed by Biden
https://www.cadc.uscourts.gov/internet/home.nsf/Content/VL+-+Judges+-+FYP
That they are all appointed by Democrats raises the question of whether the U.S. Supreme Court will overturn this, since two-thirds of the justices on the Supreme Court were appointed by Republicans.
Yet there still are some conservatives to blame for this. https://nymag.com/intelligencer/article/trump-harris-election-betting-legal-kalshi.html describes an earlier part of the case, and states that the Cato Institute supported Kalshi. This description of the previous court proceedings is meant for left-leaning readers. A more thorough summary was written by four attorneys out of Boston: https://www.wilmerhale.com/-/media/files/shared_content/editorial/publications/wh_publications/client_alert_pdfs/20240918-political-event-contract-update-previewing-tomorrows-kalshi-v-cftc-appellate-court-hearing.pdf
Besides the options in the bullet points, Congress could step in. It could pass legislation preventing Kalshi from taking bets on congressional control. Or it could pass a federal law, of dubious constitutionality, superseding Wisconsin’s 6.03(2) and any similar statutes in other states. However, a search through a state-by-state table of laws governing voter disqualification indicates that Wisconsin is the only state which specifically disqualifies electors who have made an election “bet or wager”: https://www.bazelon.org/wp-content/uploads/2017/11/2016_Voter-Challenge-Statutes-by-State.pdf#page=57. Some states may specifically penalize election betting only with fine and imprisonment. Also, some states do not allow people who have accepted “compensation” or have taken an election “bribe” to vote. Depending on the exact definitions involved, that might or might not encompass some forms of betting.
Barring any of these possibilities, there could be a very unpleasant surprise in store for some Kalshi customers, should prosecuting attorneys in Wisconsin decide to enforce the law. The prosecutions may not happen immediately. The man from Watertown was surprised to find out he was being prosecuted. He remarked, “I didn’t find out about it for 10 months.”
It would be fitting to see members of Congress looking out for their voters by preventing Kalshi from leading unsuspecting gamblers who also vote into legal trouble. After all, they’ve gone to a lot of effort trying to convince their voters that they really care about them.
Posts related to elections or districting
https://doorcounty.substack.com/t/election-or-districting-related
Posts about gambling
https://doorcounty.substack.com/t/gambling