Prediction markets have garnered attention for at least the past six years. Are they accurate? Do they provide useful information on election results above and beyond what polls tell us? I'm not sure. If you have thoughts, I'd love to hear them — email me.

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Confidence over predictions?

The narrative

The "blue wave" election was sweeping. In the wake of it, there's been a debate on X (formerly Twitter) whether prediction markets like Kalshi and Polymarket were better or more accurate than polling models. It's a question that's come up since at least 2020, when this newsletter's predecessor tracked what polls and early prediction market platforms were projecting for that year's presidential contest. Four election cycles later, it's fair to say prediction markets have, at the least, carved out a niche for themselves.

Whether that niche is tailored toward degenerate gamblers or providing legitimate market insight is maybe still a question.

Why it matters

There's a chicken-or-egg question in play here. Did prediction markets follow polling sentiment or did they — to use the term their name implies — predict where polling sentiment may lead?

I've been thinking about prediction markets less as an indicator of polling sentiment itself and more as an indicator of confidence in a given outcome. That doesn't really answer the above question, but I've found it a useful frame for my own reporting purposes. And to be clear, I've been following prediction markets for quite a while. I wouldn't say they've replaced polling data or other tools as part of my personal workflow.

So how'd they do this election?

Breaking it down

Prediction markets and polls generally matched across most of the key races that CoinDesk tracked and also generally matched the eventual outcome, with a few exceptions.

In Wisconsin's First House District, Rep. Bryan Steil lost to Democrat Mitchell Berman. Both polls and prediction markets had that race in a dead heat the Friday before.

In Alabama's Second House District, Rep. Shomari Figures defeated challenger Rhett Marques. Both polls and prediction markets showed Marques as leading against Figures in the redrawn district.

In the Iowa Senate race, State Rep. Josh Turek defeated Rep. Ashley Hinson, flipping the seat; prediction markets had given Hinson the edge, while polls, when averaged, had a 50/50 response.