Two U.S.-regulated, dollar-denominated prediction markets have recently opened for bets on the upcoming presidential election. Kalshi and Interactive Brokers’ (IAB) ForecastEx both launched their presidential markets this week, providing an opportunity for traders to wager on the election outcome.
As of now, the trading volumes on both platforms are relatively modest, with $344,101 worth of contracts traded on Kalshi and $346,000 on ForecastEx. In comparison, Polymarket, a crypto-powered prediction market platform, has seen over $1.2 billion staked on the race between Kamala Harris and Donald Trump. Despite not allowing U.S. users under a CFTC settlement, Polymarket has attracted substantial volumes throughout the year.
Economics professor Koleman Strumpf believes that it will be challenging for Kalshi and ForecastEx to catch up to Polymarket’s market share. However, he suggests that some traders may switch between platforms, potentially impacting the market dynamics. Historically, a significant portion of trades tends to occur in the period leading up to the election, indicating that there may still be room for growth in these markets.
On the legal front, attorney Aaron Brogan points out that Polymarket has certain advantages over its competitors. It is accessible to users worldwide, unlike Kalshi, which is restricted to specific groups. Additionally, Polymarket does not have explicit position limits, which could influence the total market size.
In terms of pricing, the odds for Harris and Trump vary slightly across the platforms. Harris is currently leading on ForecastEx, while Trump’s odds are higher on Kalshi. Polymarket shows a close race between the two candidates, with both at 49%.
Statistics professor Harry Crane notes that these price differences may not be significant, as there is often a margin of error in election forecasting. While the markets may not align perfectly, they can still provide valuable insights into the potential election outcome.
Kalshi recently won a legal battle against the CFTC, allowing it to list congressional contracts. The company has now self-certified its presidential contracts, enabling traders to participate in the market. The CFTC, which is considering regulations on political event contracts, has requested an expedited decision from the appeals court.
Overall, the emergence of these prediction markets provides traders with new opportunities to engage with the election process. While challenges remain, the growth of these platforms indicates a growing interest in using market mechanisms for political forecasting.