With voting underway across the country, prediction markets are expecting a Blue Wave in the midterm elections.
Industry leader Kalshi believes that Democrats are a near-guarantee to assume control of the U.S. House of Representatives. The belief isn’t as full-throated in the U.S. Senate, although Kalshi still said that the current markets are “Leaning Democrat” as votes — and trades — pour in across the country.
Prediction markets predict midterm elections
The midterm elections are an enormous opportunity for prediction markets to further legitimize themselves and institutionalize their data. The best way for this to occur would be by producing a high accuracy in races across the country after they were early to call a win for President Donald Trump in the 2024 Election, when polls believed the race was still a toss-up.
Kalshi’s prediction markets are all but certain that the House will fall under Democratic control for the next two years. Real-time market data suggests there is a 93% chance they will achieve a majority, despite more states showing support for Republicans.
Kalshi lists 10 races as true “toss-ups” in Colorado (two), Arizona, South Carolina, New Jersey, Maine, Virginia, Alabama, New York and Wisconsin.
The most-traded race is in Texas’ 11th congressional district between Bobby Pulido (D) and Monica De La Cruz (R). Kalshi traders put more than $4.4 million into predicting Pulido as a strong favorite with an 87% chance of victory at the time of writing.
Checking in on the Senate
Belief in a Democratic majority in the Senate is sitting at 71% as of noon on Tuesday. The key race is playing out in Iowa, where Josh Turek (D) and Ashley Hinson (R) both have a 50% chance. Over $12 million in trades were processed by Kalshi in this market.
Five races “lean” Democrat compared to just two that lean Republican, according to Kalshi’s midterm elections prediction markets. The most popular campaign is being waged between James Talarico (D) and Ken Paxton (R) in Texas, where users risked over $93.3 million prognosticating the outcome.
Talarico sat as high as 75% at midnight on Tuesday, although he dropped to 71% by lunchtime.
14 races are deemed either “likely” or “safe” Democrat, compared to 13 Republican.
What about governorship?
In addition to all of the congressional races, gubernatorial run-offs are also on their final day.
Kalshi prediction market data shows that 28 Democrats are believed to be in a favorable position to take control of their state. Only 24 states currently have Democratic governors.
Most of the Democratic support is in races that are “likely” or “safe”, with the exception of a showdown between Keisha Lance Bottoms (D) and Rick Jackson (R) in Georgia. Bottoms has a 67% chance of winning a race that is “leaning” Democrat.
On the flip side, four Republicans are in advantageous positions in races that are still in the “lean” category. Those four are in Florida, Texas, Kansas and Vermont. The elections in Florida and Texas drew about $37 million in combined trades.
The Trade Handle Prediction Markets Take
Prediction markets have been embattled in debates over controversial market offerings and the legality of sports event contracts. Accurately forecasting various outcomes in the midterm elections would significantly aid the reputation of prediction markets and potentially give them an industry, politics, on which they can consistently fall back instead of continually floating between industries while drawing the ire of gambling critics.