After a lengthy hike preceding the 2024 election, I shared a beer with seasoned journalist Jim Rainey, who was covering the race between Kamala Harris and Donald Trump. Polls showed it was a close contest, signaling potential trouble for Harris. In 2016, polls incorrectly predicted Hillary Clinton’s win, demonstrating the unreliability of polls at times.
Sitting at the Mt. Baldy Lodge, Jim mentioned that pollsters had attempted to adjust their methods to account for underrepresented conservatives, who had stopped responding to traditional surveys. They claimed this election would differ, but Harris lost decisively, failing to gain votes in all battleground states, which underscored the limits of polling.
Shifting from Polls to Betting Odds
The upcoming midterms highlight a trend where many disregard traditional polls for gambling odds. Online betting platforms like Kalshi and Polymarket are changing how elections are followed. These sites, popular for sports and cryptocurrency bets, are drawing attention from those eager to wager on political outcomes.
Last week, CNN reported $1.4 billion in bets on midterm predictions.
Bettors are speculating on election results, turnout, and even candidates’ speech choices. On Kalshi, a Thursday check revealed over $65 million bet on Democrats controlling Congress, with a 66% chance predicted.
Who Gamblers Favor
The Los Angeles mayoral race saw $107 million in bets, with gamblers giving Karen Bass a 57% edge over Nithya Raman. Beyond immediate elections, nearly $250 million have been wagered on the Democratic presidential nominee for 2028. Odds lean slightly towards Gavin Newsom over Jon Ossoff and Alexandria Ocasio-Cortez.
While studies struggle to determine if gamblers outpredict traditional pollsters, betting markets possess certain advantages. They swiftly adapt to new data, and users wagering money have a financial motive to accurately predict outcomes.
Risks with Prediction Markets
Despite advantages, prediction markets can be skewed as young, tech-savvy men dominate them. Integrity remains a concern, as virtual casinos are easily manipulated. One large bet can alter odds significantly, and platforms have suspended candidates for betting on their races.
This brings forward the larger issue of whether gambling on pivotal political outcomes is sensible. I might need another drink before tackling this question further.