Based on millions of dollars wagered on the market, Spencer Pratt appears to be a sure bet to win the June primary for Los Angeles mayor.
Platt was not originally an expected mayoral candidate. This former reality TV star had never held elected office, but after wildfires in Pacific Palisades destroyed his home, he turned his criticism of the city’s response into a campaign platform.
Speculators have flooded into this election through prediction markets including Kalshi, Polymarket U.S., and Polymarket International, with related trading volumes exceeding $47 million, making it the most actively traded mayoral election of 2026. Just days before the June primary, one market assigned Pratt a 78% probability of advancing to the November runoff.
But the prediction market was wildly wrong—Platt ultimately finished third.
However, Pratt’s supporters used this failed speculation to question the election’s fairness. In response, Dean Logan, Registrar of Voters for the Los Angeles County Clerk’s Office, told CNBC: “Prediction markets exacerbate confusion when people treat their forecasts as more authoritative than the actual ballots being counted.”
Prediction markets failed to accurately forecast the election, raising the possibility that markets may have been manipulated to make certain candidates appear more supported than they actually were. A CNBC exclusive report shows that this risk is real.
The discrepancy between polling surveys, speculation-driven prediction markets, and final outcomes has become increasingly significant as election betting has emerged as a prominent feature of elections. Odds and betting platforms do not use the methods of traditional political polling and therefore cannot replace political polls.
Polymarket and Kalshi are two leading prediction market platforms. They allow users to speculate on nearly anything—from who will win the 2027 NBA championship to whether the United States will confirm the existence of extraterrestrial life.
According to data from the Washington-based nonprofit Anti-Corruption Data Collective (ACDC), betting volumes on contracts related to the 2026 congressional elections have surpassed three times the amount wagered on 2024 election-related contracts. These platforms are also increasingly being used as sources of information. For the midterm election markets, Kalshi reports a viewer-to-trader ratio of 5 to 1.
Identify suspicious transactions
Despite the high trading activity and liquidity in the contract for Pratt’s election, Kalshi detected and disclosed the price spike in this trading in a case study released in July. Experts say a price spike refers to a brief but significant price jump that may make a particular outcome appear more likely. Price spikes can be caused by various factors, such as new information altering traders’ expectations, or a trader purchasing a large volume of contracts, driving up prices as cheaper contracts are bought up.
Kalshi reported that on May 20, a trader spent $1.25 million to buy the "yes" contract on "Platt will become the next mayor of Los Angeles." One of these trades caused the price of Platt’s winning contract to jump from 29 cents to 45 cents, indicating the trader believed his probability of winning had increased from 29% to 45%. However, according to Kalshi’s case study, the price returned to its previous level within nine seconds, as the market self-corrected.
Robert DeNault, the enforcement lead responsible for monitoring anomalous activity on the Kalshi platform, said: “You can be confident that there will be rational traders in the market willing to take the other side of these trades and bring the price back to where it should be.” He also said: “By the end of the day, his price was lower than at the start.”
However, ACDC’s analysis for CNBC showed multiple price surges on Kalshi and Polymarket International during the Los Angeles mayoral election, driving up Pratt’s odds. The analysis did not include trades from Polymarket U.S.
The data collected by ACDC confirms Kalshi’s findings. In that case study, Kalshi provided data only for approximately 30 minutes after large orders were placed. However, the organization found that extending the time window to three hours after the price surge resulted in a price that was 3 cents higher, and this elevated level persisted for about two hours. Over the long term, prices eventually returned to normal. But ACDC’s research suggests that the longer the price increase lasts, the greater the risk that this information is interpreted as market sentiment.
Moreover, as ACDC's research shows, election contracts are vulnerable to abnormal price spikes—just as occurred in Pratt's election.
The organization found that among 167 congressional markets on Polymarket International and Kalshi with values exceeding $100,000, 38 markets—approximately 23%—experienced price spikes that caused contract prices to fluctuate by at least 30 cents.
One example is a contract on Kalshi regarding whether Juliana Stratton would become the Democratic nominee for the Illinois State Senate. ACDC noted that two purchases on March 3 stood out—while the median order size before the election was only $12. One buyer spent $5,000 to purchase contracts supporting the long-time public official’s candidacy, pushing the price up from 47 cents to 79 cents. Three seconds later, the price returned to normal, dropping back to 47 cents; but approximately one minute later, after an additional $3,000 in contracts were bought, the price surged again to 99 cents. The final price settled at 52 cents—5 cents higher than the starting point—indicating that someone or multiple individuals spent $8,000 and, in the process, inflated the perceived likelihood of Stratton’s victory.
Two weeks later, Stratton won the Democratic primary. Stratton declined to comment on the matter, but a spokesperson from her office provided CNBC with a poll released by Public Policy Polling on the same day, showing Stratton in the lead.
A Kalshi spokesperson wrote in a statement to CNBC: “This is common on Kalshi; the market quickly corrected to a price close to fair value.”
ACDC stated that it is impossible to know the motivations behind these bets. While profit may be a factor, it is not sufficient. In prediction markets, participants can buy and sell contracts worth between $0 and $1, with prices reflecting traders’ perceived likelihood of an event occurring. The higher the contract price, the smaller the potential return. Winning contracts settle at $1, while losing contracts become worthless. Therefore, a trader who buys a contract for 99 cents expects a profit of only 1 cent if their prediction is correct, and trading fees in prediction markets further erode this minimal profit.
ACDC researcher Michelle Kendler-Kretsch said, “If predictive markets are thought to be accurate because of price incentives, then [the absence of such incentives] raises the question: What are people actually trying to achieve for themselves by engaging in these trades?”
The impact on the election results might be the answer.
A new study funded by the Brennan Center for Justice, a liberal advocacy group based in New York, found that if prediction markets favor a candidate, voters are 10 to 20 percentage points more likely to believe that candidate will win, regardless of what polls say. The survey, conducted in September, included 1,994 registered voters.
Data shared by ACDC with CNBC also shows that in markets with low trading volume, it is even easier and cheaper to move odds. Of the 18,000 active congressional markets on Polymarket International, Polymarket U.S., and Kalshi, 88% require only a single bet under $1,000 to move the price by 10 cents.
Combat market manipulation
Nevertheless, Kalshi’s market outcomes are often correct. The company wrote in a website article: “Since 2024, in U.S. elections, when Kalshi’s markets favored a candidate to win, that candidate ultimately won about nine out of ten times.” Additionally, The Washington Post reviewed 268 candidates in this year’s primaries who, at any point during the two months leading up to the primary, had a 70% to 80% probability of winning on Kalshi or Polymarket; three-quarters of them ultimately won.
Kalshi stated that it is working to address concerns about election distortion. Earlier this month, the company added new transparency features to its midterm election markets to help users understand how much confidence to place in the odds of a given contract, including labeling markets with low trading activity and displaying real-time feeds of individual trades. Polymarket has also launched its own dedicated election monitoring system “to detect attempts to manipulate election markets, distort probabilities, or fabricate the appearance of market consensus.”
Kalshi told CNBC that the company uses algorithms to generate alerts based on parameters of unusual trading activity, including suspicious trading times and volumes, as well as price spikes. However, it is unclear whether Kalshi’s internal processes triggered alerts for Pratt-related trades; the company did not respond to CNBC’s request for clarification.
Kalshi and Polymarket U.S. are both regulated by the U.S. Commodity Futures Trading Commission (CFTC), an independent federal agency whose rules aim to prevent market manipulation and insider trading. Trading prices and activities are publicly visible, and in Kalshi’s case, the order book on its derivatives exchange is also public, allowing users to report and flag suspicious trades to the exchange. Additionally, Kalshi and Polymarket U.S. collect “Know Your Customer” information, including full names and Social Security numbers.
However, it is impossible for outsiders to know who is behind each transaction.
Shana Bautista, Head of Global Intelligence and Investigations at Polymarket, said: “I previously worked at the FBI and also in centralized finance outside the blockchain. If you want information about a case or a transaction, you have to serve a subpoena or search warrant to obtain it.”
In April, Polymarket International announced a partnership with blockchain analysis company Chainalysis, which helps the blockchain-based platform track suspicious transactions on its international platform.
Chainalysis Senior Product Manager Adam Hart showed CNBC the data the company collects for each Polymarket trader. For example, Polymarket can see the number of trades, total volume bought and sold, the proportion of a trader’s bet size relative to their overall activity, and their total profit and loss.
Hart shared with CNBC a case his team investigated in collaboration with Polymarket: U.S. soldier Gannon Ken Van Dyke was charged for allegedly using classified information to place bets on the removal of Venezuelan President Nicolás Maduro and the deployment of U.S. troops into Venezuela. Van Dyke pleaded not guilty to the charges.
Hart said the wallet was flagged because it made unusually high-yield bets and never suffered a loss. Van Dyke was ultimately identified, in part because he made little effort to conceal his identity: the funds in his crypto wallet originated from cryptocurrency exchanges that require user verification. Hart also said Van Dyke transferred approximately $400,000 in profits to a major U.S. exchange.
Of course, suspicious-looking trades may simply be bets by savvy speculators or enthusiastic supporters. Such was the case with France’s anonymous “big player” Theo, who made approximately $85 million by betting on contracts supporting Donald Trump in the 2024 election. Blockchain analytics firm Bubblemaps is one of the entities tracking Theo’s roughly $60 million in bets, which were spread across at least ten Polymarket accounts. Bubblemaps traced these activities back to two crypto exchange deposit wallets owned by Theo, who stated that his bets were based on his own neighborhood polling and phone calls with voters in swing states.
Engineer election integrity
But this internal investigation did not reassure Jared DeMarinis. As the administrator of the Maryland State Board of Elections, DeMarinis firmly believes that the only way to protect election integrity is to completely ban betting on election outcomes.
In July, he requested the state attorney general’s office to investigate whether prediction markets violated state laws prohibiting bets on election outcomes. In September, several months later, he prohibited certain individuals and election officials—including election judges and members of the state election commission—from participating in election markets.
DeMarinis said, “We hired 26,000 election judges, who are the poll workers. They gain access to information before the official tabulation and counting begins. They will know certain things. This is deeply problematic because it concerns the legitimacy and integrity of the election process.”
According to the Pew Research Center, more than half of the states have laws that make betting on elections illegal in whole or in part. Prediction markets argue that these contracts should be regulated by the CFTC rather than individual states, as they are classified as swaps and fall under federal jurisdiction. The CFTC also supports this view.
However, these laws may not apply to federally regulated prediction markets. With support from New Jersey and dozens of other states, parties have requested the Supreme Court to determine whether CFTC rules are sufficient to address election-related concerns and whether states have additional standing to sue.
Meanwhile, prediction markets continue to expand by launching more election-related products.
Kendler-Kretsch said: “We don’t have much information about whether prediction markets are accurate. When a trade doesn’t align with the election outcome, it’s not causing people to doubt prediction markets and their accuracy—it’s causing people to doubt the election itself.”
—— Ananya Chetia contributed to this report.
Disclosure: CNBC has a commercial relationship with Kalshi, including customer acquisition partnerships and a minority equity investment.