| Wagering on U.S. elections has long existed in American politics — but never before like this. A recent federal court decision has opened the floodgates for gamblers, day traders and political junkies to legally bet on the contest between Kamala Harris and Donald Trump . Tens of millions of dollars worth of wagers have been placed in the last three weeks alone — and that’s not including on offshore markets, where the betting has been going on for months. The markets’ odds are now seemingly everywhere, from Bloomberg Terminals across Wall Street to the Las Vegas Strip. Political betting markets like Polymarket and Kalshi are supposed to be a better alternative to traditional polling for forecasting election outcomes because participants are putting real money on the line. Or at least that’s what the executives behind them, academics and other boosters, including Elon Musk, will tell you . However, the soothsaying skill of political gamblers is still open to question. And now, with much of Washington watching, the markets face their biggest challenge to date: Can they actually get the election right? The so-called prediction markets currently show Trump’s odds of victory close to or even better than 60 percent, a point the former president has already noted on the campaign trail. Their rise to the political main stage comes after years of growing doubt about the accuracy of traditional polls, which were historically bad four years ago. (Several national polling averages indicate that Harris holds a slight lead over Trump today.) Harry Crane , a statistics professor at Rutgers University, said the betting markets “are the best source of information” given that they are constantly “synthesizing” polls, voter turnout data, mail-in ballot counts and other variables. Kalshi CEO Tarek Mansour calls them a “new source of truth” that can break through the sea of headlines, misinformation and punditry swirling around American politics. “When you have markets where you incentivize to be right and disincentivize to be wrong, you have a better guarantee for truth,” Mansour, whose exchange is federally regulated and allows for wagers of up to $100 million, told MM. “You just do.” Not everyone is sold. Berwood Yost, director of the Center for Opinion Research at Franklin & Marshall College, said “markets aren’t always rational.” Better Markets CEO Dennis Kelleher, a leading critic of legal election betting in part because of concerns they can be manipulated, doubts how well gamblers can predict the outcome considering they’re “a very small, unrepresentative subsection of Americans.” And billionaire hedge fund manager Paul Tudor Jones said Tuesday on CNBC that he doesn’t “necessarily believe the betting markets.” Traders have proven their forecasting chops in election seasons past and on other types of wagers. However, like most other political forecasting tools and pundits, they’ve also had several notable misses. That includes failing to foresee Trump’s victory eight years ago and predicting a “red wave” in the 2022 midterms that never materialized. “The markets are going to get a lot of things wrong,” one active political trader told MM. Fueling the latest round of skepticism about their accuracy is the markets’ recent swing in favor of Trump. Trump’s and Harris’s odds of winning were largely equal until earlier this month when the markets suddenly shifted toward the former president. Behind the bump — at least on Polymarket, a cryptocurrency-powered prediction market that is supposed to be shut off to U.S. traders — is a handful of mysterious accounts that have reportedly dumped more than $40 million into Trump wagers. Of course, the buying has spurred concerns about potential manipulation of the markets. Rajiv Sethi, an economics professor at Barnard College, said he worries the markets are being taken “too seriously.” His fear? People will look at the trading as “some evidence that suggests the race has changed in a fundamental way" even though “the models are not reflecting that," he said. But political betting markets aren’t polls, backers are quick to note. A 60 percent chance of a Trump win, they say, is really still just a coin toss. And the markets will usually tend to correct over time when someone starts to move them because of faulty information or personal biases. Whether that’s the case this time could be critical. Regulators and lawmakers are still circling , and, if they’re wrong, another trader said the markets could take a “reputational hit.” “There’s a long time between now and Election Day,” said Aristotle CEO John Phillips, whose company runs the decade-old political prediction market PredictIt. “So I’d expect more twists and turns before this thing’s over and even after Election Day — because this is not necessarily going to be over on the 5th.” IT’S THURSDAY — T-minus 11 days until Election Day. Want to talk about betting markets? Give me a shout: dharty@politico.com. And, as always, if you’ve got tips or pitches, send them Sam’s way at ssutton@politico.com.
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