The flurry of trading activity experienced by prediction markets came to a head with the midterm elections on Tuesday.
Industry leader Kalshi reported $2.5 billion in total notional trading volume, nearly double its $1.3 billion total during the 2024 Presidential Election, and had several markets push beyond $100 million in notional trading volume.
- Texas was responsible for two separate nine-figure prediction markets.
- Maine significantly outperformed its population size with its trading interest.
- A key swing state was indiscernible at prediction markets right up until votes were revealed to the public.
Kalshi users generated $716 million in combined notional trading volume on the platform on Tuesday, the final day of voting, according to Aldrin Research.
Prediction markets have prided themselves on their accuracy and real-time reflection of user sentiment.
Prediction companies were among the first entities to predict that President Donald Trump would win the Presidential Election in 2024. They promised to continue that legacy by delivering more accurate predictions than polls and other services during the midterm elections, leading to extraordinary trading totals.
Who Will Control the House? - $400.6 million
Since launching shortly after the 2024 Presidential Election, this market generated over $400 million in contract purchases and sales at Kalshi and $105 million in notional trading volume on Tuesday, according to Aldrin Research. Republicans were never favored during the near-two-year period, despite having the majority during that time.
The market eventually settled in favor of the Democrats, who dominated the early results.
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Texas Senate Winner - $197.8 million
Democrat James Talarico was declared the winner over Republican Ken Paxton in a race that produced $197.8 million in trades and $113.5 million on Tuesday, per Aldrin. Talarico was a 73% favorite on the morning of the midterms and is expected to win with a margin of roughly 12.5%.
This marked the first time that Texas had a Democratic Senator since 1988.
Texas Governor Winner - $107.6 million
Incumbent Republican Greg Abbott was a comfortable favorite to retain his spot as the man in charge of Texas. He had a 60% chance at midnight on Tuesday and was at 62% just before 7 p.m. locally, before Democrat Gina Hinojosa surged into the lead.
There was $107.6 million in trades processed by Kalshi overall, including $89.3 million on election day. Hinojosa will become Texas’ first Democratic governor in 35 years.
Florida Governor Winner - $45.5 million
While the “Blue Wave” hit America hard during the midterms, Florida stayed Red as the term-limited incumbent, Ron DeSantis, wasn’t allowed to seek re-election. Byron Donalds, who was favored entering election day, pulled out the victory by a margin just over 1%.
Kalshi users generated $45.5 million in notional trading volume predicting the winner of the race in total, with $31.8 million of that coming on Tuesday. Democrat David Jolly outperformed polling averages, but still came up short.
Maine Senate Winner - $38.4 million
Despite being one of the least-populated states in the country, the Maine Senate race between Troy Jackson (D) and Susan Collins (R) was of particular interest to Kalshi traders. The platform reported $38.4 million in trades on the race and $13.4 million on Tuesday.
Jackson had been favored in the market since the middle of August. He was a 61% favorite a week ago and never dropped below that mark, eventually taking a comfortable lead over Collins, the incumbent.
How Many Seats Will Democrats Hold in the Senate? - $20.8 million
The Democrats were expected to dominate in the House. The same couldn’t be said in the Senate, although they were still expected to achieve a majority over the Republicans.
Kalshi’s prediction markets showed that the Dems were believed to be in line to receive 52 seats in the Senate for the past month. That number rose to 53 for the first time on Monday, where it currently remains after $20.8 million in notional trading.
Iowa Senate Winner - $19.3 million
One of the key battleground states in the Senate was in Iowa, where Josh Turek (D) was facing Ashley Hinson (R). Prediction markets were mostly able to identify at least a lean in every Senate race except for this one.
Neither candidate rose higher than 52% in likelihood of winning the race during the 48 hours building up to Tuesday evening, and both took turns leading the race. Turek surged into the lead just before 6 p.m. local time and surged from then on, eventually earning enough votes to become the projected winner by about 4.4% before all of the votes were counted.
Kalshi generated $19.3 million in trades from this key race, with $7.9 million of that coming just on Tuesday, per Aldrin Research.
