Donald Trump and Kamala Harris have pursued high-profile talks and stunts to gain an edge in the home stretch of their campaigns, yet we may look back and realize the âOctober surpriseâ of the election was the emergence of betting markets.Â
Platforms like Kalshi, PredictIt and Polymarket lead the charge here, crowd-sourcing White House outlooks from a niche base of bettors and traders.
Meanwhile, the brokerage Robinhood announced Monday its entry into the space, offering event contracts that allow customers to trade on the presidential race.Â
While traditional polls remain roughly even, more than $2.5 billion wagers on Polymarket give Trump a sizable 31-point lead, as of this writing.
Kalshi, the sole legal US platform, shows similar odds based on $90 million in wagers.
A company spokesperson told me prediction markets âprovide more truth, fasterâ compared to traditional polls.Â
Tracking real-time public sentiment like this, in their view, provides a tool against misinformation.Â
âThis will put pressure on polls to get more accurate and less biased over time, which is a good thing for everyone,â the spokesperson added.
That said, betting markets raise a chicken-and-egg dilemma known as reflexivity.
Instead of merely reflecting what people think might happen, these platforms can influence how people behave in real life.Â
That altered behavior, in turn, can lead to further swings on the original prediction platform.Â
Critics rightfully worry about the potential for self-fulfilling prophecies based on the views of a very specific, speculative demographic.Â
Two questions come to mind:Â
How much do Trumpâs rising odds among a subset of gamblers influence how the broader population votes in real life?Â
Can favorable or unfavorable odds impact whether people vote?Â
These will be difficult to answer even after November 5. Regardless, betting platforms will only get more popular.
The upside is that a bigger, more liquid market will make it harder for big-money gamblers to manipulate. Â
To be clear, whether prediction markets prove more accurate than polls on November 5 is besides the point.
They each measure different things.Â
Consider someone who puts money on Trump while still casting a ballot for Harris. The bet reflects more confidence in a certain outcome, but it doesnât necessarily align with how the individual would respond to a poll.
Tom Bruni, head of market research at StockTwits, pointed out that speculation hasnât been constrained to the likes of Kalshi and Polymarket, but rather has erupted across financial markets. Â
Case in point, Trump Media stock surged over 21% on Monday, bringing its month-to-date rally to 163%.
The jump in the Truth Social parent companyâs share price has coincided with Trumpâs climbing election odds.
âI think the true reflexivity here is the positive feedback loop between people betting on speculative investments and asset prices,â Bruni told me.
âTheyâve been rewarded for their purchases and are likely to continue until the momentum stops.â
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