Prediction Markets Boomed in 2024. Midterm Trading Shows the Limits

From a court ruling to a boomlet

A month ahead of the 2024 election, a federal court authorized Kalshi to offer markets tied to elections within the United States for the first time. Afterward, Kalshi and Polymarket rolled out late-stage advertising and grabbed notice as trading on their platforms suggested Donald Trump had stronger chances than a lot of polls.

Two years later, the picture looks more mixed. During this cycle's last week leading up to Election Day, Bloomberg News found that Kalshi's US election turnover was about the same as in the comparable week before the 2024 vote. Polymarket, by contrast, saw US election trading shrink significantly when tallying both its international venue and its newer US exchange.

Where the volume actually went

Overall volumes have soared since October 2024, up more than 20 times. Most of that growth came from wagers on sports and crypto prices. Kalshi's recent surge also leaned on user-built combination bets, or parlays, which link multiple outcomes and carry higher risk. About 99% of combo activity is in sports.

Politics did not keep pace. In the prior month, only 1% of trading across Kalshi and Polymarket involved politics, a steep drop from the share seen during the 2024 presidential election. That thin activity also matters because smaller markets are easier to nudge.

The venue mix flipped too. In 2024, Polymarket was the biggest platform while Americans were not allowed to use it, though some reportedly accessed it via virtual private networks. Now it is the opposite.

Kalshi, which is US regulated, is handling weekly notional totals that exceed Polymarket's US and international venues by tens of billions of dollars, according to Bloomberg's review of trading data. "Now it's a completely different picture," said Kelly Ye, who is head of research at Talos.

Thin markets, easy to move

Low-liquidity election markets are more vulnerable to being pushed around. A Monday analysis by the Anti-Corruption Data Collective, a nonprofit of academics and researchers, found almost all midterm markets on Kalshi and Polymarket have such little depth that a few thousand dollars could meaningfully move prices. "When you introduce tens of thousands of markets, but not all of them have national prominence or are able to attract betting volume, that opens up a lot of vulnerabilities where a savvy, potentially malicious actor could go in and bet a small amount of money and skew the odds in one way or another," said David Szakonyi, the collective's co-founder and a member of the political science faculty at George Washington University.

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Kalshi called the findings "baseless." Spokesperson Jack Such said the true cost to manipulate would be much higher and that markets are well calibrated against such attempts. He also said major events like elections and sports typically see most of their trading close to resolution. Polymarket didn't answer a request for comment.

Both firms say they watch for suspicious activity. This month, Polymarket opened an inquiry into Israeli election trading that bore hallmarks of insider trading. Kalshi has in the past barred politicians who wagered on their own contests. There have also been earlier instances in which a small burst of trading abruptly moved a candidate's odds, prompting worries about attempts to shape perceptions of a race.

The 2026 setup and why it matters

Part of the pullback in political trading is straightforward: no presidential ballot this year. Activity has centered more on who will control the House and Senate than on individual contests. Broadly, market forecasts have mirrored expectations that Democrats will capture both chambers, in line with most polling.

Some races still draw real money. One week before the midterms, the Texas Senate contest topped the charts with roughly 79 million dollars traded on Kalshi by Monday. That was roughly a quarter of the 277 million dollars recorded in markets on congressional control and balance of power.

Beyond a few high-profile Senate contests, volumes fall off fast. By Monday, the day before Election Day, just five House races had more than 1 million dollars of trading on Kalshi.

Even with modest sums behind many race-specific markets, the odds are getting more airtime after both platforms cut media deals to include their forecasts. Prediction-market specialists have also warned that many readers may not understand how these odds differ from polls.

The bottom line for your portfolio: the center of gravity has shifted to sports and crypto, while political markets are a much smaller slice than in 2024 and thin liquidity can make prices easier to sway. Expect volumes to rise closer to results, but treat election odds as one data point, not a verdict.

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