Xavier Becerra is refunding contributions from prediction markets companies while remaining the overwhelming favorite in the markets they operate.
The Democratic nominee for California governor is returning donations from Kalshi and other prediction markets after questions surfaced about the conflict created when companies take bets on an election while donating to candidates running in it. Attorney Daniel Wallach first noted the move on X.
Is California gubernatorial candidate @XavierBecerra distancing himself from prediction markets? His latest campaign finance statement (filed last week) shows he refunded the maximum contributions from Kalshi ($39,200) and Underdog Sports Holdings ($50,000). pic.twitter.com/hq8rl3NvTz
– Daniel Wallach (@WALLACHLEGAL) October 3, 2026
The move follows months of scrutiny over Kalshi’s $39,200 contribution to Becerra shortly before June’s primary, when its market already showed him as the favorite.
Becerra now has a 96% chance to win in both major prediction markets. More than $72 million has traded on Kalshi’s California governor market, while Polymarket has attracted roughly $41 million in volume.
The prediction markets problem
Kalshi donated $39,200 to Becerra’s campaign days before the June primary, when the former attorney general was already trading as the clear favorite on its platform. The donation was the company’s second-largest reported contribution to a California candidate at the time.
Becerra’s refund does not suggest the campaign or platform violated campaign-finance law.
It does, however, acknowledge the optics: A platform should not be able to trade political contracts on a candidate while also financing that candidate’s campaign without raising concerns about influence and market integrity.
Becerra is still a market lock
Becerra’s refund will not change what traders think about his chances.
On Kalshi, he is trading at 96% with nearly $72 million in volume. Polymarket shows the same 96% price with approximately $41 million traded.
Those are enormous figures for a state-level political race and signal that traders see Becerra as virtually certain to become California’s next governor.
The odds have only strengthened since the primary. Kalshi was pricing Becerra at roughly 74% in late May, shortly after its contribution to his campaign became public.
Markets can be wrong, and a 96% price is not an election result. But the alignment between Kalshi and Polymarket, combined with more than $100 million in total trading between them, makes California one of the clearest examples of prediction markets becoming a parallel form of campaign scoreboard.
That is also why the donation issue is so sensitive. These platforms do not merely observe political races from the outside. Their prices are increasingly cited as an indicator of candidate viability, and their brands benefit from the attention the races generate.
Why the platforms give
The contributions are part of a broader lobbying and political spending push by an industry fighting for the right to offer event contracts nationwide.
Prediction market firms argue that their products are federally regulated financial contracts under the Commodity Exchange Act. States, tribal governments, gaming regulators and traditional sportsbooks increasingly argue that contracts on sports outcomes are gambling and should be subject to state licensing, taxes and consumer-protection rules.
That battle has made governors, attorneys general and state lawmakers strategically important.
Kalshi, Polymarket and the Coalition for Prediction Markets spent at least $3 million on lobbying and campaign contributions across federal and state politics in 2026, according to an OpenSecrets review.
Kalshi directed substantial funding toward the political networks that support governors and attorneys general:
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$150,000 to the Democratic Governors Association
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$100,000 to the Republican Governors Association
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More than $300,000 combined to the Democratic and Republican attorneys general associations
In California, Kalshi has also spent heavily to influence the policy environment. It reported $62,000 in state lobbying in the first half of 2026 on three Assembly bills and outreach to the governor’s and attorney general’s offices concerning prediction markets.
The reason is straightforward. State attorneys general are leading legal challenges against sports-event contracts, governors influence regulatory priorities and legislation, and state lawmakers can determine whether prediction markets face explicit restrictions or gain a clearer pathway to operate.
The companies are not making these contributions because California’s governor will decide the outcome of a single market. They are giving because governors and attorneys general can shape the industry’s ability to operate at all.
A growing political contradiction
The Becerra refund exposes a tension that is likely to follow the industry into every major election cycle.
Prediction markets sell themselves as neutral information markets, places where people trade probabilities based on what they think will happen. But the companies behind those markets are increasingly political actors themselves, lobbying state officials, financing party committees, and donating to candidates whose elections they list as tradable contracts.
That does not necessarily make their odds inaccurate. A market price comes from traders, not from a platform choosing the winner.
Still, perception matters. If platforms are simultaneously profiting from attention to an election, accepting customer trading on the outcome and cutting checks to candidates, skeptics will argue that the industry is building influence over the political ecosystem it claims merely to measure.
Becerra has chosen not to be part of that experiment. His campaign is giving the money back even as traders on prediction markets put his chances near 100%.
