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After the recent lifting of the U.S. ban on election betting, billions of dollars have reportedly flowed into prediction markets, with these platforms now competing with polls as key indicators of the upcoming November elections.
In October, ReadWrite reported that derivatives trading platform KalshiEx LLC was cleared to facilitate Americans’ bets on election results following a ruling by the Court of Appeals. Since then, bettors have placed over $12 million in wagers on Kamala Harris and Donald Trump, according to the platform’s founder.
Kalshi’s CEO, Tarek Mansour, told The Wall Street Journal that the platform’s user base has been “doubling day over day” since the U.S. District Court for the District of Columbia ruled earlier this month against a Commodity Futures Trading Commission order banning political bets. The agency is currently appealing the decision.
Prediction markets are the new source of truth. pic.twitter.com/5uUc4Q4rU6
— Tarek Mansour (@mansourtarek_) October 18, 2024
Other platforms, such as PredictIt and Polymarket, have been in operation longer than Kalshi. However, Polymarket reportedly leads in betting volume, with $1.9 billion in wagers on the election. The New York-based company claims to attract tens of millions of visits each month.
Earlier this month, Trump’s odds surged on Polymarket, hitting a two-month high. At the time of writing, Polymarket priced in a 61.3% chance of a Trump win versus Vice President Kamala Harris’ 38.6%. It extends the former president’s odds to their highest level since early August—shortly after Harris took over the Democratic nomination from President Joe Biden.
Trump is up 55% to 45% for Harris on Kalshi, and PredictIt shows Trump’s campaign in the lead as well.
Are prediction markets better than polls?
Supporters of prediction markets argue that they offer a more sophisticated method for forecasting political events than polls, as they react to new information in real time and involve financial stakes.
However, critics contend that these markets are susceptible to manipulation, pointing to examples like a large recent bet on Trump that may have skewed the odds in his favor, or Elon Musk’s post on X to his millions of followers, promoting betting markets as “more accurate than polls.”
U.S. regulators are still determining the boundaries for prediction markets. The Commodity Futures Trading Commission has taken a firm stance against election betting, using a combination of proposed regulations and legal actions to enforce restrictions.
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