The U.S. election season is coming to a close, with just two weeks left before the big day. While some may breathe a sigh of relief when it’s all over, prediction market platforms are buzzing with activity.
Kalshi, a platform that only started offering election prediction market contracts in October after a court ruling in its favor against the Commodity Futures Trading Commission, has seen trading volume on its main election contract soar past $30 million. Despite this impressive figure, Kalshi still lags behind its competitor, Polymarket, which raked in around $40 million in its first month of presidential betting from January to February and has now surpassed $2 billion in total.
One interesting aspect of Kalshi is its regulated status, which required it to wait on the sidelines until it secured a legal victory. This regulatory oversight has shielded Kalshi from accusations of market manipulation that have plagued Polymarket. While Polymarket leads in total betting volume, Kalshi’s regulated approach has positioned it as a more transparent and secure platform for traders.
On Kalshi, Republican nominee Donald Trump currently holds a 14 percentage point lead over Democratic candidate Kamala Harris according to U.S. national traders. In contrast, Polymarket does not allow U.S. traders on its platform but does not enforce a strict know-your-customer process. Additionally, bets on Polymarket are settled in cryptocurrency, while Kalshi settles bets in regular dollars.
Tarek Mansour, co-founder of Kalshi, has emphasized the platform’s integrity and transparency in response to allegations of market manipulation. The platform’s data shows that the median bet size on Harris is actually larger than the median bet size on Trump, dispelling the notion that a few large bets are skewing the odds.
While Polymarket has garnered attention from none other than Donald Trump himself, who has mentioned the platform at rallies as “Polypoll,” there are discrepancies in the numbers. While individual state-level contracts on Polymarket show Trump winning every swing state by a comfortable margin, a contract asking if he will win all swing states is only at 32% on the “yes” side. This mismatch presents potential arbitrage opportunities for savvy traders.
In the world of prediction markets, imperfections and inefficiencies are common, creating opportunities for skilled traders to capitalize on these disparities. As the election draws near, the excitement and activity in prediction markets are sure to continue to grow.
As the landscape of prediction markets evolves, platforms like Kalshi and Polymarket will play a crucial role in shaping the future of political betting and trading. With transparency, regulatory compliance, and user-friendly interfaces, these platforms are set to revolutionize the way we engage with political events and predictions.