Prediction markets claimed accuracy after US midterms despite missing surprises

Prediction markets pointed to strong Democratic expectations in the US congressional midterms as voting closed on Tuesday, with more than 1.48 billion dollars wagered on the legislative elections. BetInt data showed around midnight GMT on Wednesday that Democrats had a 98 percent chance of winning the House of Representatives, up four percentage points from mid-afternoon. Markets briefly indicated an 88 percent chance of Democrats taking the Senate, up 14 points from early in the day, before the figure fell to about 80 percent.

After the election, Kalshi and Polymarket celebrated what they called accurate forecasting. Kalshi reported 2.5 billion dollars traded on midterm markets, nearly double the 1.3 billion dollars from the 2024 cycle. Polymarket recorded nearly 700 million dollars in wagers across its US and international platforms during this election cycle, according to Reuters.

“it's easy to overread”

Polymarket said on X that it was right and claimed 98.4 percent of resolved midterm races went to its favorite the day before Election Day. Kalshi said candidates favored on its platform won or led 98 percent of races before polls closed. Valerie Cross, head of emerging verticals at NEXTPredict.io, said the figures are easy to overread and reflect how quickly markets incorporated early returns, exit polls and county counts.

Experts said the markets accurately predicted major races but failed to foresee a Democratic tsunami and missed historic and surprise wins. Analysts warned that if midterm results differ considerably from implied market probabilities, the sector's reputation could be affected, especially given the record sums wagered. Kalshi and Polymarket also face pressure to avoid misconduct after several candidates bet on themselves.

A Washington Anti-Corruption Data Collective investigation revealed that political markets can be manipulated. The platforms gained prominence in 2024 when they pointed to Donald Trump winning the presidency against traditional opinion polls. Since then, they have attracted followers worldwide among media outlets and investors.