Democrats scored a commanding victory in Tuesday's midterm elections, shifting the balance of power in Washington and offering a clear reading of voter frustration with President Trump and his party. Yet nearly all of the night's results had been signaled hours before polls closed, not by traditional polling or television networks, but by online prediction markets.
Platforms such as Kalshi and Polymarket have proven increasingly reliable in recent election cycles at capturing public perceptions of likely political outcomes and current events. They were accurate again on Tuesday, as traders poured billions of dollars into election markets while lawmakers stepped up scrutiny of the industry over insider trading and gambling addiction.
"There's no way around it, the prediction markets seem to be highly accurate," said Ross Dahlke, a computational social sciences expert and professor at the University of Wisconsin-Madison. He added that markets react to fresh information far faster than traditional media, which remain constrained by concerns over accuracy and fact-checking.
Many key race results were being projected correctly on the platforms hours before major TV networks, which rely on decision desk data and voter analysis, declared winners. Kalshi said Wednesday its markets accurately predicted 98 percent of House, Senate, governor, attorney general, lieutenant governor and secretary of state races, comparing market favorites at 5 p.m. EST, shortly before the first polls closed in Indiana and Kentucky, with races called so far.
With results still arriving Wednesday, Kalshi reported 95 percent accuracy on House races and 94 percent on Senate contests, including highly competitive seats in Texas, Maine and Kansas that all went to Democrats. Dahlke cautioned that the early figures cover only resolved markets, which may be easier to call than unresolved ones, and that many races were fairly certain heading into Election Day.
Polymarket said its midterm markets were accurate in 98.4 percent of resolved races when measured against the day before the election, citing roughly 97 percent accuracy in Senate and governor races and 98.6 percent in House races. "It's now routinely hours between when prediction markets call it versus the TV networks," CEO Shayne Coplan wrote on X. "The networks hold out until absolute certainty, and the suspense keeps it entertaining all night. No knock to them, but now there's Polymarket, and many people are realizing they want to know what's happening in real time."
Prediction markets surged in popularity after the 2024 election, when traders on both platforms correctly picked Trump to defeat former Vice President Kamala Harris. The sites let users wager on real-world events ranging from major business deals and natural disasters to military actions and live sports, and members of Congress have voiced growing concern that people with access to pertinent information could profit from it.
The business is growing. Kalshi said trading volume on its election markets nearly doubled over two years, from $1.3 billion in the 2024 cycle to $2.5 billion this cycle. A recent Washington Post analysis estimated nearly $2 billion was wagered on Tuesday's midterms on platforms such as Kalshi and Polymarket.
The industry has had high-profile misses as well. Polymarket gave Brazilian presidential candidate Flávio Bolsonaro a greater than 80 percent chance of winning late last month before he lost to President Luiz Inácio Lula da Silva. Kalshi traders priced a 78 percent chance that Republican Spencer Pratt would advance in the Los Angeles mayoral primary, but sitting Mayor Karen Bass and progressive Nithya Raman made the final contest. And Kalshi gave Francesca Hong a 95 percent chance in Wisconsin's Democratic primary for governor in August; David Crowley won the nomination instead.
Matthew Bakowicz, a business professor at American University, said Tuesday may prove pivotal for the industry. "This creates a powerful incentive to participate again, potentially converting casual observers into active traders," he said, adding that the election may have introduced an entirely new customer base that believes it has an informational advantage. "As these platforms attract more participants and larger amounts of money, lawmakers will likely focus increasingly on market integrity. Interestingly, the more successful these platforms become, the more scrutiny they may attract."
