Hundreds of thousands of dollars have been spent on prediction markets ahead of next week’s elections in Connecticut.
Websites like Polymarket and Kalshi let users trade on future real-world events.
Right now, the midterms are everywhere. And even though the races in Connecticut aren’t making national headlines, hundreds of thousands of dollars are still being bet on the outcome.
“They're bringing together buyers and sellers on both sides of the markets, and based on the expectations that they have, they make bets on whether an event is going to occur or not,” said Tom Murray, an associate economics professor at Fairfield University’s Dolan School of Business.
“The way that's priced is based on probability,” he continued. “So if you were to go to one of these websites, you’ll see prices for events between zero and one. A low number represents a low probability of the event happening. As the number goes up, the market dictates that the event has a higher probability of occurring.”
Kalshi and Polymarket have spent more than $200,000 trading on Connecticut election questions. Options include who will win the governor’s race, what voter turnout will look like, and what the margin of victory will be.
This cycle, the sites are seen as indicators. Murray said they offer a different perspective than traditional polling.
“People are willing to place monetary wagers on these outcomes, and that's a little bit different than like your traditional polling,” Murray said. “It's a difference between stated preferences and revealed preferences.”
On Kalshi, a contract on Governor Ned Lamont (D) is $0.96. A State Senator Ryan Fazio (R-Greenwich) contract is $0.04. Polymarket’s odds are similar.
There are concerns with making political betting widely available. For one, insider trading has already been an issue with the sites. President Donald Trump’s former teleprompter operator used Kalshi to bet on what Trump would say in speeches the staffer had advance access to.
It’s also bringing new, particularly young eyes to trading, which can be addictive.
Plus, adding money to political vitriol can raise the stakes in an already divisive situation.
“I can't help but think that that's probably true,” Murray said. “I don't have an economic model to point to for that, but I think that's probably a fair statement.”
Despite the downsides, Murray said the new form of engagement can also help get young people interested in politics.
“I'm not saying that it's foolproof by any stretch or it's totally safe, but it does inform people about what is out there,” Murray said. “And if that allows people to dig into the issues a little bit more, then there is some benefit to it.”
Connecticut is suing Kalshi for unlicensed sports betting. The state sent Polymarket a cease-and-desist for the same reason.
The federal Commodity Futures Trading Commission oversees them instead of individual states, which typically oversee gambling. The sites argue they aren’t offering sports betting but rather trading, so states shouldn’t have oversight.
