Kalshi and Polymarket: How Reliable Were Midterm Bets?

Key Points

• Prediction markets were giving a 93% chance of the Democrats taking the House, and sure enough they did win both chambers.
• You can’t just quote one single total for midterm betting, published figures vary from $431 million to a whopping $1.9 billion.
• ACDC did a little digging and found that one trader could move 96% of tested markets by a lousy five cents, as long as they were willing to fork over $3,500 to do it.

Prediction Markets Had a Winning Night but Can Their Figures Be Trusted?

There was just one big bet, $951,198, that came in on Polymarket as the polls were closing on Election Day, 3rd November. It was a bet on the Democrats taking the House, and guess what? They did. But the huge headline figure of $1.4 billion that everyone’s been talking about is a whole different story. The trouble is that no two sources agree on the actual total; published figures vary from $431 million to $1.9 billion. The difference really matters here, just as much as the fact that the Democrats won.

Election Night Odds Shot Up Overnight

Polls started closing at 6 pm ET on Election Day. By 9 p.m., prices collected by BETINT on Election Night showed that the Democrats were a virtual lock to win both chambers. Reuters reported that a whopping $4 million+ worth of last-minute bets came in within minutes of the first polls closing, all that’s left are millions of uncounted votes, so these figures were still just a forecast at that point.

Reuters broke the news on 4 November that the Democrats had taken both the House and the Senate, and that the midterms were “the first prediction market election” as Kalshi CEO Tarek Mansour put it. On Election Day, Kalshi gave the Democrats a 93% chance of winning the House and a 73% chance of sweeping the Senate. One winning election isn’t enough to make a prediction market a reliable forecasting tool.

The $1.4bn Headline, A Mess of Numbers

When CNN did some analysis on 23 October, it put the midterm betting volume at over $1.4 billion. Kalshi was handling a whopping $1.1 billion, while Polymarket was at $340 million. A few days later, The Washington Post came up with a total estimate of $1.9 billion, again, with most of the action happening on Kalshi and Polymarket.

Kalshi had $1.33 billion in trades across all the midterm markets and you add in $145 million in Polymarket congressional markets, and that brings the election night total to a whopping $1.48 billion. The ACDC meanwhile counted more than $431 million in congressional markets across three platforms by 29th October. These numbers cover all sorts of different types of market activity, so they don’t necessarily measure the same thing.

There were over 28,000 markets in all, but most of the money kept getting funnelled into a handful of really big races. The Texas Senate contest, for instance, had more than $67 million in betting by 29 October, while Michigan pulled in a cool $26 million. And to make matters even more complicated, the way market volume is counted can create all sorts of illusions about how much money was really at stake.

From Courtroom Victory to a Midterm Habitual

The path to this achievement for Kalshi has begun not at the trading desk, but in the courtroom. The company successfully sued its regulatory agency, started listing federal election contract positions in October 2024 and stopped the CFTC appeal in 2025. This has enabled Kalshi to create a national market for midterms.

In July, Kalshi launched a Midterms Hub with live odds, poll data and fundraising information. CNN and CNBC now showcase Kalshi’s odds, while The Wall Street Journal uses Polymarket prices.

ACDC’s Data Shows How Easily Prices Can Be Moved

As per ACDC’s latest research, the analysis of 15,985 congressional markets with live order books showed that in 96% of these markets, a price shift of five cents could be achieved for $3,500 or less. Even in the most expensive markets, a five-cent shift could be done for less than $25,000 in 90% of cases.

Moreover, a small number of traders were responsible for a huge portion of activity on Polymarket. In particular, the top 1% of wallets contributed to 75% of volume on Polymarket. This figure is reported to be 70% according to Reuters in mid-October.

ACDC also uncovered some evidence of possible wash trading. As per ACDC, in one set of transactions 544 Polymarket wallets traded for $618,395 and carried out 591 round trips while making just $34 in profits. ACDC researchers admitted that the prediction markets may provide accurate predictions but stated that “probabilities should not be taken as infallible.”

In April, Kalshi suspended three congressional candidates who bet on their races. By late October, there were six such cases according to CNN. In particular, Kalshi called them “political insider trading” and gave them a five-year ban.

Platforms say they reinforced their protections. Also, politicians and campaign employees cannot trade on political markets according to Kalshi. They also claim that prices are quickly adjusting after a significant move in the market and represent the available information not an absolute truth. According to a Reuters/Ipsos poll, Americans mostly oppose such betting on markets.

Utah Breaks Up The Legal Showdown Into Three Cases

Utah’s ongoing battle with Kalshi has turned into a three-case mess, each running at its own pace. On Oct 26th, the US and the CFTC filed a federal complaint. They made the argument that federal law trumps Utah’s own rules on gambling.

Just 2 days later, Attorney General Derek Brown laid 13 felony counts and one misdemeanour on Kalshi and its co-founders. Utah investigators claim that a state agent went undercover in September, signed up for an account and placed some sports bets which is a no-go in Utah.

Kalshi just dismissed the whole thing as “Utah playing politics at its worst”. The company has vowed to fight the charges in court, even though they’ve only been made as allegations so far. To add to the mix, there’s also a separate civil case that the federal complaint is trying to challenge.

A few days later, federal lawyers asked for a temporary stay and preliminary injunction to shut down Utah’s actions. On Nov 6th, there’s a status conference scheduled; as of this writing, no injunction has been granted yet.

It’s The Midterms, But For Kalshi It’s Just Another Business Day

Kalshi got a lot of public attention around election time, but sports actually drive the majority of its business. According to Trefis, sports betting accounts for nearly 80% of Kalshi’s trading activity. Put that against the heady excitement of an election, and the whole midterm cycle comes across as just a few days of trading in the grand scheme of things.

Similarly, after the 2024 election, trading on Polymarket collapsed by a whopping 84% the next day. Meanwhile, DeFi Rate tracked $120.73 in US prediction market trading across 8 different exchanges in October that’s a 64.1% increase from September. Against that total, the $1.4 billion traded during the whole midterm cycle comes to about 1%. To put that in perspective, it’s tiny compared to the $120 billion turned over that same month.

Investors still seem pretty confident in the sector though Kalshi just wrapped up a $1 billion Series G funding round, with a valuation of $40 billion. Kalshi CEO Tarek Mansour said that Sequoia and Wellington led the round.

The Expert Verdict: Not That Hard to Manipulate Or Quote

We reckon the $1.4 billion figure has turned into more of a marketing slogan than a reliable measure of midterm betting. Four different credible estimates range from $431 million to $1.9 billion because they count different types of activity. Media outlets that just parrot the biggest figure without breaking it down are more interested in making it sound exciting than actually giving you a clear idea of what’s going on.

We should also be looking more closely at the claims about prediction accuracy. ACDC measured how cheap it was to move markets, not whether people actually spent that money to influence the outcome. And even so, the finding that 96% of tested markets could be manipulated with a mere $3,500 or less is pretty hard to ignore. The election in Brazil in October offered a warning sign when prediction markets were heavily favouring Flavio Bolsonaro, but Lula ended up winning in the end.

Our real concern is what’s driving the business behind these election markets. With Kalshi’s estimated 80% sports share, it’s clear that the midterms were also used as an ad for its sports betting business. And investors are valuing that business at a staggering $40 billion. When it takes just $3,500 to move a price by five cents, is that price really a reliable forecast or is it just an ad?