Prediction markets entered election night with a strong track record. More than 87% of all election markets across Kalshi and Polymarket gave the winning candidate at least a 90% chance of victory 24 hours before polls closed, according to a CNBC analysis. Many midterm races were uncompetitive, which helped lift that overall hit rate.
Trading activity surged as results arrived on Nov. 3, and market prices swung toward Democrats after returns from Indiana began rolling in before 7 p.m. The night offered a real-time view of how traders digest incoming results, with millions of dollars changing hands on individual outcomes.
"I'd say prediction markets did pretty well," said Koleman Strumpf, a professor of economics at Wake Forest University. "But they didn't outperform the best," he added, pointing to traditional forecast polls that tracked results that night. Odds and gambling platforms do not rely on the methodologies used by traditional political polling, so they are not substitutes for political polls.
Some of the night's largest wagers missed. After 8 p.m. on Nov. 3, at least $1 million was traded on a Kalshi market backing incumbent Texas Gov. Greg Abbott to win reelection. Abbott ultimately lost to Democrat Gina Hinojosa by more than 700,000 votes, according to the Associated Press. A little after 11 p.m., more than $1.4 million was traded on Kalshi on the outcome that Republicans would not secure control of the House of Representatives, a bet that aligned with the night's broader Democratic sweep.
After the midterms, Polymarket CEO Shayne Coplan and Kalshi CEO Tarek Mansour both took to the social media platform X to credit prediction markets with correctly calling races. Nate Silver, the political forecaster who founded the Silver Bulletin newsletter and joined Polymarket as an advisor in 2024, pushed back, arguing that forecast models drove market movement. "Prediction market probabilities strongly converged toward [our models] in individual Senate and gubernatorial races," Silver wrote, adding that he tracked the races closely because he anticipated a debate in which prediction markets are "low-key stealing valor from the models."
Overall volume on midterm election contracts across Kalshi and Polymarket more than tripled from the final week of October into midterms week, according to a CNBC analysis of data published on Predictions.com. That figure excludes combo markets, which bundle multiple contracts and pay out only if every leg resolves in the trader's favor.
Kalshi said it exceeded $3 billion in total midterm contract volume, a figure on its website that also includes contracts on mayoral races. Last week, Polymarket's two exchanges reported nearly $700 million in midterm contract volume. Even so, election trading remains small next to sports, which continues to draw more volume than all other categories combined.
The Democratic wave that prediction markets broadly anticipated could create fresh problems for the industry. Three days after the midterms, Sen. Adam Schiff, D-Calif., criticized the Commodity Futures Trading Commission, the federal regulator overseeing the platforms, for permitting sports contracts. "Sports prediction markets are sports bets. By effectively requiring prediction markets to offer contracts in all 50 states, even on Tribal lands, the CFTC is once again violating state law and Tribal sovereignty," Schiff wrote on X.
