Prediction market platforms stepped up their role in election forecasting on Tuesday, with markets accurately predicting numerous races before voting closed and predicting outcomes in front of news organizations.
So far, Democrats have won 54 Senate seats — including wins in Iowa, which prediction markets placed at 50-50 odds, and South Carolina, where Republicans narrowly favored.
The major prediction market platforms were actively predicting the race on Tuesday night at X. These predictions were sometimes released before many media outlets had made their own predictions or before a significant number of votes had been counted.
call with confidence
Polymarket praised the way X predicted races, saying that in 10 major races, the platform called races a median of 31 minutes earlier than news outlets such as CNN, Fox News and the Associated Press.
Polymarket CEO Shayne Coplan said in an X post: “Nowadays, it’s common for hours to pass between when a prediction market predicts it and when a TV network predicts it.” “There’s no need to worry, but now we have a poly market and a lot of people want to know what’s going on in real time.”
Even in races where markets initially favored the candidate who eventually lost, they quickly adjusted once initial vote counts came in. In South Carolina, Democratic Senate candidate Annie Andrews was seen as the favorite on Kalshi to win shortly after 7:30 pm, only 30 minutes after polls closed.In Texas, Democratic Rep. Gina Hinojosa ousted Republican Gov. Greg Abbott, and Hinojosa’s odds in the polls jumped from 39% to 73% within five minutes after the first round of voting closed.
Still, Michelle Kendler Krech, a researcher at the nonprofit Anti-Corruption Data Collective, said a successful night for prediction markets shouldn’t stop efforts to better regulate platforms. She cited a recent Reuters/Ipsos poll that found most Americans oppose the use of prediction markets for election trading.
“Just because the market was accurate this time doesn’t mean risks and vulnerabilities changed overnight,” he said.
before midterm exam
Just before the mid-term elections, prediction markets were predicting major elections around the world, including Brazil’s presidential election, with Luiz Inácio Lula da Silva having only about a 20% chance of defeating Calsi before voting ended.
Prediction markets also came up short in several high-profile Democratic primaries over the summer, predicting progressives had a very good chance of winning in Wisconsin and Michigan, for example. Michigan Democrat Abdul El-Sayed narrowly won the primary and cruised to victory in Thursday’s general election.
Scholars who have studied prediction markets for decades argue that if the candidate with lower market odds ultimately wins the race, the platform is not wrong.
“If you toss two coins, there’s a 25% chance of it coming up heads twice in a row, and no one would be terribly surprised if that happened,” said Rajiv Sethi, an economics professor at Barnard College.
Eric Zitzewitz, an economics professor at Dartmouth College, said that despite Tuesday’s early success, it’s still not clear whether casual observers understand how market probabilities work.
But as prediction markets gain traction, the public will have a better understanding of how to interpret odds, Zitsewitz said.
With the next election on the horizon, prediction markets will continue to be influential until the next presidential election, experts say.
“Last time around (in 2024), prediction markets were in the discussion, but they were in the discussion in a way that was a little bit unsure,” said Harry Crane, a professor of statistics at Rutgers University. “This was the first true prediction markets election.”
Disclosure: CNBC and Kalsi have a commercial relationship that includes customer acquisition and minority ownership.
