Prediction markets allow users to bet on whether events will happen, including election outcomes. Platforms such as Kalshi and Polymarket promote their data as a bottom-up alternative to political experts and opinion polls. However, the evidence cited in the commentary suggests that the markets are driven less by collective wisdom than by a small group of highly skilled traders.
A working paper by researchers from London Business School and Yale University found that almost every bettor’s results were no better than chance. The accuracy came from about 3% of accounts whose traders were consistently successful. The wider crowd generated most of the trading volume but contributed relatively little information.
An analysis of 1.6 million Polymarket accounts by The Wall Street Journal similarly concluded that casual traders were losing money while sophisticated professionals, including firms with extensive data resources, collected the gains. According to the analysis, three-quarters of profits went to 0.1% of accounts, while roughly 2,000 accounts earned nearly half a billion dollars among at least 2.3 million accounts.
The successful traders benefit from speed, data and technical systems. The researchers cited in the commentary said they respond quickly to news, compile polling information and use costly data streams. Algorithms help them forecast price movements and manage risk, allowing large operators to execute tens of thousands of trades each day.
The markets’ influence extends beyond the participants. A study funded by the Brennan Center found that prediction-market odds substantially affect voters’ expectations. Because those expectations can influence voter behavior, prices that appear to measure public sentiment may also help shape the political outcomes they claim to forecast.
The commentary notes that market prices reflect trading activity, liquidity and available capital rather than a representative poll. A well-funded trader can move a thinly traded contract without any corresponding change in voters’ views. This creates a risk that the public and the media will mistake financial positioning for reliable political information.
The possibility of manipulation is another concern. Historical examples of political betting and modern cases involving election contracts illustrate how wagers can be used to create momentum or exploit inside information. Elected officials and candidates are prohibited from participating in such markets, but the commentary says that aides have nevertheless faced allegations of betting on their own candidates. Polymarket has investigated dozens of potential fraud cases connected with the midterm elections.
Political prediction markets are also expanding commercially. Media, financial and technology companies are making agreements to use their data, while estimates of trading volume for the 2026 midterms vary considerably. One estimate cited puts volume above $220 million, compared with $92.4 million during the 2024 election cycle; representatives of Kalshi and Polymarket have claimed combined volume of $1.4 billion for the upcoming midterms.
The platforms earn money through trading fees and returns on funds held between purchases and payouts rather than by directly taking the other side of each bet. Kalshi was recently valued at $22 billion and Polymarket at $9 billion, although the commentary questions whether those valuations could reflect a speculative bubble.
The author distinguishes political betting from wagers on sporting or unusual events. The central objection is not simply that some users may lose money, but that election markets can turn political judgments into financial contests and give disproportionate influence to traders with superior resources. In the view presented, that combination risks distorting democratic debate and voter perceptions.
Sources: The Guardian Business.