Early Results Shift Election Markets Toward Democrats
Trading on Kalshi and Polymarket accelerated during the Nov. 3 midterm elections, with prices moving toward Democrats after Indiana results began arriving before 7 p.m., according to CNBC. The platforms broadly anticipated Democratic control of Congress, while election-night activity illustrated how quickly traders adjusted their positions as vote counts supplied new information.
A CNBC analysis found that more than 87% of election markets across the two platforms had assigned the eventual winning candidate at least a 90% probability of victory 24 hours before election night. That result came with an important qualification: many races were not competitive. Their inclusion lifted the overall success rate, limiting what the headline figure alone reveals about performance in closely contested elections.
Large Trades Accompany a Texas Upset and House Positioning
Some of the largest transactions highlighted by CNBC occurred after voting results were already arriving. After 8 p.m. on Nov. 3, at least $1 million was traded on a Kalshi market backing the reelection of Texas Gov. Greg Abbott. The Republican incumbent ultimately lost to Democrat Gina Hinojosa by more than 700,000 votes, according to Associated Press results cited by CNBC.
A little after 11 p.m., more than $1.4 million was traded on Kalshi on the outcome that Republicans would fail to gain control of the House of Representatives. Together, the examples show substantial trading around both individual candidates and congressional control. The reported amounts describe trading activity; they do not establish how many participants were involved or their eventual profits and losses.
Election Volume Expands, but Sports Remains Larger
Volume in midterm-related contracts across Kalshi and Polymarket more than tripled between the final week of October and election week, CNBC found in an analysis of data published by Predictions.com. That comparison excluded combination markets, which package multiple contracts together and pay out only when every component settles in the trader's favor.
Kalshi's website reported more than $3 billion in total midterm contract volume, a tally that also included mayoral-race contracts. Polymarket's two exchanges reported nearly $700 million in midterm volume during election week. Those figures have different reporting scopes and should not be treated as a directly comparable market-share measure. Despite the election surge, CNBC reported that sports trading remained larger than all other categories.
Market Executives and Forecasters Dispute the Credit
After the elections, Polymarket CEO Shayne Coplan and Kalshi CEO Tarek Mansour used posts on X to credit prediction markets with correctly anticipating race outcomes. Wake Forest University economics professor Koleman Strumpf offered a more qualified assessment to CNBC: the markets performed well, he said, but did not surpass the strongest traditional forecasting approaches.
Nate Silver, founder of the Silver Bulletin newsletter, challenged claims that markets deserved independent credit for those predictions. Writing in Silver Bulletin, he argued that probabilities in individual Senate and gubernatorial markets moved substantially toward his models, suggesting those forecasts influenced prices. Silver became a Polymarket adviser in 2024. Prediction platforms do not use traditional political polling methodologies, and their implied probabilities are not substitutes for polls.
Political Success Does Not Remove Regulatory Pressure
The Democratic gains also brought renewed attention to the industry's regulatory exposure, particularly its sports business. Three days after the midterms, Sen. Adam Schiff, D-Calif., criticized the Commodity Futures Trading Commission for permitting sports contracts. In a post on X, he characterized those products as sports betting and argued that the regulator's approach effectively required their availability nationwide, including on Tribal lands, in violation of state law and Tribal sovereignty.
Schiff's remarks were a political criticism, not an announced regulatory decision. The report identified no specific next enforcement action or legislative timetable, leaving the consequences for the platforms uncertain. The dispute nevertheless concerns their largest trading category, rather than election contracts alone. CNBC also disclosed a commercial relationship with Kalshi involving customer acquisition and a minority investment, relevant context for its reporting on the platform.
Source: CNBC