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Midterm upsets put prediction market probabilities in the spotlight

Democrat Annie Andrews bested Graham in South Carolina, and analytics firm BETINT pointed to further upsets in House races in Indiana, Ohio and Missouri, where Democrats with market odds of 25 to 40 percent ultimately won.

Several candidates favored by prediction markets lost midterm races, including Darline Graham in South Carolina, according to Reuters. Graham had been assigned roughly a 70 percent chance of winning.

Democrat Annie Andrews defeated Graham, delivering one of a handful of results that went against market favorites.

Surprises extended to House contests

Analytics firm BETINT identified additional upsets in House races in Indiana, Ohio and Missouri, according to Reuters.

Democrats won those contests despite market-implied chances of 25 to 40 percent. The results placed several lower-probability outcomes on the winning side of the midterm tally.

What it means for prediction markets

  • Graham’s loss illustrates the distinction between being a market favorite and being certain to win: roughly 70 percent odds still leave room for defeat.
  • The Democratic victories flagged by BETINT show that candidates priced at 25 to 40 percent can prevail. Those probabilities indicate an underdog, not an impossible outcome.
  • A handful of upsets alone does not establish whether markets were well calibrated overall. That assessment would require a broader set of probabilities and results than the supplied reporting provides.
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    Reuters via Duke Country
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    Reutersreuters.com
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