Prediction markets have a lot riding on the blue wave
Summary
Prediction-market companies Kalshi and Polymarket earn fees regardless of which outcome wins, but a Democratic sweep in the midterm elections could strengthen their public credibility. A Republican win in either chamber could renew comparisons with polling firms after recent prediction-market misses abroad.Key Facts
- Kalshi and Polymarket take fees from trades rather than betting against their users.
- The article says prediction markets gained public attention after users correctly predicted Donald Trump would defeat Kamala Harris two years earlier.
- The platforms recently missed election outcomes in Brazil and Israel, according to the article.
- Both platforms’ markets put the chance of Democrats winning both chambers of Congress at about 75%.
- The article says a Republican win in either chamber could damage the platforms’ credibility, even though a 75% forecast allows for an unsuccessful outcome.
- The article says Democrats are generally more hostile to prediction markets than Republicans, but a Democratic-controlled Congress would not have veto-proof majorities.
- The article identifies the Supreme Court as a more likely source of significant constraints than Congress.
- Political markets bring in less revenue than sports markets, but may remain relevant for longer.
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