Midterm trading volume puts election market credibility under scrutiny

Traders have staked more than 1.4 billion dollars on midterm event contracts on Kalshi and Polymarket, according to The Daily Upside. The election offers a fresh test of how market-implied probabilities compare with results.

Senate control in focus

Senate control is expected to hinge on races in Alaska, North Carolina, Maine, Michigan and Texas, according to The Daily Upside. Those contests are central to the broader outcome traders are pricing.

As of Friday, both exchanges assigned Democrats a probability of 70 percent or higher of winning the Senate. That places Democrats as the market favorite, while leaving a meaningful probability of a different result.

A recent miss adds scrutiny

The Senate pricing comes a week after markets implied about an 80 percent chance for Flavio Bolsonaro in Brazil before he lost, according to The Daily Upside. That outcome provides a recent reminder that even a heavily favored candidate can be defeated.

For Kalshi and Polymarket, the midterms therefore carry reputational stakes alongside substantial trading activity. The comparison with Brazil draws attention to the distinction between a probability estimate and a prediction treated as certain.

What it means for prediction markets

• The timing matters: The Senate probabilities describe pricing as of Friday, not necessarily prices at the time of the election.
• Watch the pivotal races: Alaska, North Carolina, Maine, Michigan and Texas are the contests identified as likely to determine Senate control.
• Favorites can lose: The Brazil result illustrates the risk of reading high implied probabilities as guarantees; one outcome alone does not establish whether a market is well calibrated.