Prediction Markets Face First Major Election Test as Midterm Contracts Expand

Prediction markets Kalshi and Polymarket enter the November 3 midterm elections far larger than in 2024, when U.S. election contracts became legal only a month before the presidential vote. Combined monthly trading volume more than doubled from $26 billion in May to $53 billion in July, mostly on sports, according to a Pew Research Center analysis. Politics remains a small slice, averaging about $2 billion a month on Polymarket and under $300 million on Kalshi, Pew found. More than $30 million had been traded by July on which party will win the House and Senate, CNBC reported. The Commodity Futures Trading Commission proposed a "structured framework" for event contracts on June 10 under which elections would not count as gaming, after withdrawing a 2024 proposal that would have classified them as such, per a Congressional Research Service analysis. A $3,500 bet, the maximum personal campaign contribution under federal law, can move 97% of midterm-related markets by five cents or more, the Anti-Corruption Data Collective found.