The fight for the White House appears to be over, yet the nightmare scenario of a litigated result — and a recalcitrant incumbent refusing to accept the results — has only just begun.

The historic an hard-fought race for the White House, which extended beyond Election Day, culminated on Saturday in former Vice President Joe Biden winning Pennsylvania’s Electoral College votes. Yet it’s also hardened President Donald Trump’s recalcitrance over the voting results.

Even as the Keystone State put the Democratic challenger over the 270 threshold, the incumbent signaled he would continue his legal fight — especially with other state ballots still not fully certified, yet leaning toward Biden.

“Beginning Monday, our campaign will start prosecuting our case in court to ensure election laws are fully upheld and the rightful winner is seated,” the Trump campaign said in a statement. “The American People are entitled to an honest election: that means counting all legal ballots, and not counting any illegal ballots. This is the only way to ensure the public has full confidence in our election.”

After chaotic election night market action that saw predictive markets swing dramatically toward Trump — then back to Biden by early Wednesday — betting data from Smarkets suggest there’s a now a 64% chance that Trump won’t concede if he loses the election. Moreover, the betting site’s investors believe there may not be a declared winner for several days.

Biden appeared to have the advantage in places like Georgia, where votes are still being certified. Meanwhile, states like Arizona, Michigan and Nevada have already called by The Associated Press, even as the Trump campaign pushes back on certified results.

“While legal challenges and recounts could leave some additional uncertainty, none of these appear likely to shift the overall outcome, as Biden leads in states worth 306 electoral votes,” wrote Goldman Sachs analysts on Saturday.

Still, the narrow and inconclusive results in some states — combined with Trump significantly outperforming public opinion polls — have amplified the prospect of a contested vote that gets dragged into the courts.

That possibility has been on the radar since at least this summer, after a war of words between the president and the U.S. Postal Service fanned speculation that Trump could refuse to honor the results of the vote.

With the Trump campaign now demanding recounts in states where the margins of victory were narrow, “the election outcome has morphed from a wide victory margin for the ‘Blue Wave’ to a more complicated result perhaps determined by the Supreme Court,” investment bank Jefferies said this week.

The president is now threatening to mount challenges across disputed states, meaning “it could potentially take weeks for a result to be known. This could complicate the process for getting a stimulus bill passed before Christmas,” the bank added.

Heading into the election, polls and predictive markets overwhelmingly favored Biden to emerge as the next U.S. president, even as Trump narrows the polling gap in key competitive states. Investors appeared inured to the prospect of more legislative gridlock — thus preserving the status quo of divided government — with stocks roaring in midday trading, even as uncertainty lingered.

However, according to Smarkets’ Head of Political Markets Sarbjit Bakhshi, there was more going on beneath the surface of the hard numbers.

"We’re seeing this contrast between the betting markets and polling data partially because bettors are taking into account a host of potentially important factors that other models may not, such as polling errors, voter suppression, and issues related to the count,” Bakhshi said.

"If the result is subject to legal challenges, the Republicans’ packing of state courts and the pro-conservative Supreme Court could increase Trump's chance of ensuring the result he is looking for — something the Biden camp will know only too well,” the analyst said.

The orderly transition of power is a touchstone of American democracy, and essential to the stability of a market that’s viewed as the world’s most liquid and reliable. Yet for months, the president has alarmed some public officials with suggestions that he may not concede if he views the election results as fundamentally flawed or unfair to him.

In recent weeks, a clutch of high-ranking Republican lawmakers — including Senate Leader Mitch McConnell — have publicly rebuffed Trump’s refusal to commit to a peaceful transition.

In fact, some investors have fretted for months about an election that ends up in the courts. A recent survey by financial advisory firm deVere Group found that a whopping 72% of its clients cited an inconclusive or litigated result as their biggest market worry, and a separate analysis earlier this year by Eurasia Group this year listed a disputed election as its top global risk.

According to Mark Haefele, chief investment officer at UBS Global Wealth Management, “A contested election cannot be completely discounted. The COVID-19 pandemic has triggered an unprecedented surge in litigation related to how, and when, votes will be counted.”

He cited figures showing more than 350 lawsuits already underway in over 40 states that challenge ballot drop-boxes and other voting logistics.

Accordingly, the prospect of a prolonged outcome is all but certain to ratchet up market volatility, weighing heavily on U.S. asset markets. At least for the moment, investors are looking beyond the uncertainty, with Wall Street on Friday closing out its best week in decades.

Javier David is an editor for Yahoo Finance. Follow Javier on Twitter: @TeflonGeek

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