CNBC analysis reveals that in the 24 hours before election night, in all election markets on Kalshi and Polymarket, over 87% of them predicted at least a 90% chance of victory for the final winner.
Election night revealed how traders reacted to the real-time results of the midterms: As the results from Indiana began to come in before 7 p.m. on November 3, trading activity surged, and market prices shifted in favor of the Democratic Party. Since many of the midterms were not highly competitive, this also improved the overall accuracy of market predictions.
“I would say that the predictions of market performance were quite good,” said Coleman Trumpf, a professor of economics at Wake Forest University ( Koleman Strumpf ). “But they didn’t surpass the best ones,” he added, referring to the traditional poll predictions that were tracked that evening.
The odds and betting platforms do not use the methods employed in traditional political polls, therefore they cannot replace them.
Large-scale transactions occurred on election night, as predicted by the market.
After 8 p.m. on November 3rd, there were at least one million US dollars in bets on Kalshi that the current governor, Greg Abbott ( Greg Abbott ), would be re-elected. According to The Associated Press, Abbott ultimately lost to Democrat Gina Hinojosa ( Gina Hinojosa ) by a margin of over 700,000 votes.
As the election night approached 11 p.m., there were over $1.4 million in bets on Kalshi that the Republican Party would not gain control of the House of Representatives.
After the mid-term elections, Polymarket CEO Shane Copeland ( Shayne Coplan ) and Kalshi CEO Tarek Mansour ( Tarek Mansour ) both posted on the social media platform X, praising the prediction market for accurately forecasting the results of these elections. Political prognosticator and founder of Silver Bulletin Communications, Nate Silver ( Nate Silver ), raised objections, claiming that the prediction models influenced the trend of the prediction market. Silver joined Polymarket in 2024 as a consultant.
“The probability forecasts in the market strongly converge to [our model] in the races for individual Senate seats and governorships,” Silver wrote on Silver Bulletin. “I have been closely monitoring these situations because I anticipated that we might end up in such a debate: where the forecast market quietly ‘steals’ the credit for the model.”
Sports still dominate
According to the analysis of data published by Predictions.com by CNBC, from the last week of October to the midterm election week, the trading volume of contracts related to the midterm elections on Kalshi and Polymarket more than tripled. This data does not include composite markets, which are markets where multiple contracts are bundled together and payments are only made when each component is favorable to traders.
However, compared to the trading volume related to sports, the trading volume of midterm election contracts still pales in comparison; sports remain the largest category in terms of scale.
According to the data from the Kalshi website, the total trading volume of contracts for the mid-term elections on that platform exceeded 3 billion US dollars, which also includes contracts related to the mayoral campaigns. Last week, two exchanges on Polymarket reported that the trading volume of mid-term election contracts was close to 700 million US dollars.
Although the market generally expected that Democrats would control Congress, this "blue wave" is also expected to impact other aspects of this industry.
Three days after the mid-term elections, California Democratic Senator Adam Schiff ( Adam Schiff ) criticized the Commodity Futures Trading Commission ( CFTC ), the federal agency responsible for regulating these platforms, for allowing the existence of sports betting contracts.
"The sports betting market is essentially sports gambling. By requiring that the betting market offer contracts in all 50 states, including even tribal lands, CFTC is once again violating state laws and tribal sovereignty," Schiff wrote on X.
Revelation: CNBC has a business relationship with Kalshi, which includes customer acquisition and a minority equity investment.
