US midterm election betting surges past $1.4 billion as Democrats score major wins

Prediction markets are facing a crucial test of their ability to forecast political outcomes as betting on the 2026 US midterm elections crosses $1.4 billion. Early results point to a strong performance by Democrats, raising the prospect of a shift in control of Congress.

Democrats have secured significant victories in key Senate races, including North Carolina and South Carolina, while early results have also strengthened their chances of taking control of the House of Representatives. By late Tuesday, November 3, NBC and CNN had projected a Democratic victory in the House, although the final outcome of several contests, particularly the battle for the Senate, remained uncertain.

The election results have triggered sharp movements in prediction markets, with traders rapidly adjusting their positions as vote counts come in. According to Reuters, more than $1.48 billion had been wagered on the midterm elections, making the contest a major test for platforms such as Kalshi and Polymarket.


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Big money on line as traders bet on Democratic gains

Traders across the US have increasingly turned to prediction platforms to wager on congressional races, control of Congress and other election-related outcomes.

These platforms allow participants to buy and sell contracts based on whether a particular event will occur. Prices fluctuate as new information emerges, reflecting traders' changing assessments of the likelihood of an outcome.

Prediction markets gained prominence during the 2024 presidential election after signalling Donald Trump's victory despite diverging from traditional opinion polls. Their growing influence has since attracted investors, media organisations and professional traders.

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Prediction markets enter mainstream financial circles

The growing interest has also helped prediction markets gain wider acceptance in financial circles. An October gathering in New York, NEXTPredict, attracted more than 2,000 traders, investors and platform representatives, with several sessions focused on election-related contracts.

Adjacent Markets, a platform developing tradable indexes based on prediction-market contracts, has also seen increased activity around the elections. Its Democrat Political Futures Index gained 2.38% over seven days, while its Republican counterpart rose 0.14%, according to figures cited in the original Reuters report.

Growing institutional interest reflects a shift in how prediction markets are viewed, with platforms increasingly positioning themselves as alternative sources of information on political and economic developments.

Kalshi and Polymarket dominate election betting

Kalshi and Polymarket account for a significant share of election betting activity. Kalshi reported $1.33 billion in trading volume across midterm-related contracts, while approximately $145 million was wagered on congressional markets on Polymarket, according to Reuters, citing research by the Anti-Corruption Data Collective.

More than 28,000 midterm-related markets have been opened, with several closely contested Senate races attracting substantial trading activity. The Texas Senate race alone had drawn nearly $67 million in wagers by October 29, while Michigan's Senate contest had attracted more than $26 million, Reuters reported.

The platforms have also come under increased scrutiny over concerns about market manipulation and insider trading. Questions have been raised after some political candidates were found betting on their own races, prompting platforms to strengthen their safeguards.

Prediction markets face credibility test

The strong Democratic performance has given prediction-market traders an early indication that their bets could pay off. However, the results also present a broader test of the industry's ability to accurately price political developments.

Research cited by Reuters suggests that prediction markets are generally well calibrated across large numbers of events. However, their ability to forecast closely contested races remains less certain, with several high-profile forecasting misses highlighting their limitations.

The distinction between market pricing and actual election outcomes remains important. Even sophisticated traders can misjudge political developments, while sudden shifts in vote counts can trigger sharp price movements.

For an industry that has attracted record trading volumes and growing mainstream attention, the 2026 midterms could prove an important milestone in establishing its credibility as a forecasting tool.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)