More than 87% of all election markets across Kalshi and Polymarket gave the right candidate at least a 90% chance of winning their race 24 hours before election night, a CNBC analysis found.
Election night showed how traders reacted to real time midterm results, as trading activity surged and market prices shifted to Democrats after results from Indiana began rolling in before 7 p.m. on Nov. 3. Many midterm races were uncompetitive, which boosted the overall hit rate on prediction markets.
"I'd say prediction markets did pretty well," said Koleman Strumpf, a professor of economics at Wake Forest University. "But they didn't outperform the best," he added, referring to traditional forecast polls that tracked results that night.
Odds and gambling platforms do not use methodologies used by traditional political polling, and therefore are not substitutes for political polls.
Prediction market saw big trades on election night.
After 8 p.m. on Nov. 3, at least $1 million was traded on a Kalshi market that incumbent Gov. Greg Abbott would be reelected. Abbott eventually lost to Democrat Gina Hinojosa by more than 700,000 votes, according to the Associated Press. A little after 11 p.m. on election night, more than $1.4 million was traded on Kalshi that Republicans would not secure control of the House of Representatives.
Following the midterms, both Shayne Coplan , the CEO of Polymarket, and Kalshi CEO Tarek Mansour were on the social media platform X crediting prediction markets for correctly predicting races. Nate Silver, a political forecaster and founder of the Silver Bulletin newsletter, disputed the claim, arguing forecast models influenced prediction market movement. Silver joined Polymarket as an advisor in 2024.
"Prediction market probabilities strongly converged toward [our models] in individual Senate and gubernatorial races," Silver wrote on Silver Bulletin . "I was tracking this stuff closely, precisely because I envisioned that we might wind up in this sort of debate where prediction markets are low-key stealing valor from the models."
Prediction market volume on midterm election-related contracts across Kalshi and Polymarket more than tripled from the last week of October into the midterms week, according to a CNBC analysis of data published on Predictions.com . The data did not include combo markets, which bundle multiple contracts and pay out only if every leg resolves in the trader's favor.
Still, volume on midterm contracts pales in comparison with sports volume, which remains larger than all other categories.
Kalshi exceeded $3 billion in total midterm contract volume, according to the platform's website, which also includes volume for contracts on mayoral races. Last week, Polymarket's two exchanges reported nearly $700 million in volume for midterm contracts.
While prediction markets broadly anticipated Democratic control of Congress, the blue tsunami is expected to bite the industry in other ways.
Three days after the midterms, Sen. Adam Schiff, D-Calif, criticized the federal regulator responsible for the platforms, the Commodity Futures Trading Commission, for allowing sports contracts.
"Sports prediction markets are sports bets. By effectively requiring prediction markets to offer contracts in all 50 states, even on Tribal lands, the CFTC is once again violating state law and Tribal sovereignty," Schiff wrote on X.
Disclosure: CNBC and Kalshi have a commercial relationship that includes customer acquisition and a minority investment.
