Bettors Wager Over $220 Million on Midterm Elections via Prediction Markets

Prediction markets Kalshi and Polymarket have facilitated over $220 million in wagers on the outcomes of the upcoming midterm elections, a figure more than double the trading volume recorded for the entire 2024 congressional election cycle. The Anti-Corruption Data Collective reported that this surge in activity covers over 21,000 congressional election markets this cycle, a substantial increase from the 463 markets involving similar races two years prior.

Despite the overall growth, a significant portion of the trading volume is concentrated in a few specific contests, notably the Texas Senate race between Republican Ken Paxton and Democrat James Talarico. Other heavily bet-upon Senate races include those in Maine, Michigan, and South Carolina. On Polymarket's international platform, a small group of accounts—the top 1% of wallets—accounted for 70% of the congressional election trading volume during this cycle.

The nature of the bets has also evolved. While picking outright winners remains the dominant form of wagers, there has been a notable shift towards betting on victory margins. Fifty-eight percent of this year's congressional betting markets focus on these margins, compared to only 16% for selecting winners, a decrease from 71% in 2024. However, many of these more narrowly focused markets have seen relatively low trading volume, according to researcher Michelle Kendler-Kretsch.

The expansion of election betting has prompted concerns among policymakers and advocacy groups regarding potential insider trading and the impact on public confidence in democratic processes. Reports have surfaced of campaign staffers placing bets on races they are involved with, and Kalshi has suspended several candidates for wagering on their own contests. The platform explicitly bars politicians and campaign workers from betting on elections and has issued lifetime bans, such as that against former Representative George Santos for betting on his attendance at the State of the Union address.

Polymarket has defended its market oversight, stating, "We use state-of-the-art surveillance and dedicated detection systems built for political markets." The company also asserts that its election markets demonstrate a 98% accuracy rate one day before voting.

A recent Reuters/Ipsos poll indicated that a majority of Americans oppose betting on elections through prediction markets. Researchers like Michelle Kendler-Kretsch have described these markets as introducing "a disruptive new financial technology on our democratic process."