Kalshi says the election-betting business is booming.
A spokesperson for the prediction market operator told Covers on Wednesday that in the three weeks since an appeals court paved the way for Kalshi to restart trading in election-related contracts, there has been more than $70 million in buying and selling.
“Demand for Kalshi has exploded recently,” Kalshi's Jack Such said in an email.
Moreover, according to Such, “multiple users” have placed trades worth more than $200,000. Some accounts (one might refer to them as “whales”) have even built up positions on candidates totaling more than $750,000.
Is the money talking? pic.twitter.com/Jk0ebmXNR7
— Theo Von (@TheoVon) October 23, 2024
Trading volume is expected to keep growing ahead of the election on Nov. 5. As more and more Americans sit down to think about who they want to vote for, there’s a decent chance some will also decide there are candidates on which they’re willing to place a wager. Kalshi is now a spot where they can find the latest US election odds.
“In past years on other prediction markets, it's not uncommon for almost half of all trading volume to happen in the days running up to the election,” Such said.
Let them bet
It’s all part of a shift in legalized election wagering in the U.S. that has happened almost overnight, and in time to capitalize on the attention on the election that continues to build ahead of Nov. 5.
Previously, “experimental” prediction markets PredictIt and Iowa Electronic Markets were the sole avenues for Americans to legally bet on elections. Suddenly, the options for U.S. political punters have increased, including via Kalshi and Interactive Brokers. While they have yet to reach the heights of the U.K.'s Betfair Exchange or similar markets, they are growing.
“Americans should be allowed to trade on elections because electoral outcomes are extremely valuable information to know, and markets are the most efficient mechanism to aggregate information,” Such said. “Election markets not only enable hedging candidate risk, increasing economic stability, they also provide a public good: a sentiment indicator more accurate than polling that updates in real time.”
Kalshi's election markets currently range from your basics ("Who will win the Presidential Election?") to contracts with a little more spice (including a "Who will win the House, Senate, and Presidency?" parlay).
The company is also “adding more markets by the day,” Such said, including recent additions like who will win Nebraska’s Congressional districts and whether Elon Musk will get appointed to a Cabinet post.
Hail to the chief
Still, the market attracting the most action thus far (understandably) is the presidential race, which had generated more than $56 million in trading as of Wednesday afternoon.
At that same time, Kalshi's contract prices forecasted a 58% chance that Republican Donald Trump would win the presidential election in November. Democrat Kamala Harris trailed the former president, priced at a likelihood of 42% to win.
Kalshi and other prediction markets have had to push back against allegations that they are easy to manipulate, or bad for democracy (Kalshi disagrees). The U.S. Commodity Futures Trading Commission, for one, has tried to spike Kalshi’s election-related contracts over concerns about market manipulation and otherwise.
The company has had to fight the regulator in the courts for the right to offer election-related contracts. Kalshi has prevailed so far, even if the CFTC’s appeal is ongoing.
One of the reasons given by an appeals judge for unfreezing a lower-court decision (and allowing Kalshi to restart trading in its election-related contracts) was that the CFTC “has failed at this time to demonstrate that it or the public will be irreparably injured absent a stay.”
Frenemies
For its part, Kalshi argued that preventing it from offering its contracts could harm the public interest, as it would restrict U.S. election betting to unregulated exchanges.
In the meantime, Kalshi continues to work with the CFTC, which remains its regulator.
“The CFTC hasn't imposed anything unique on us; so far, we've been working with them on combating suspicious activity just like we do for all of our markets, not just election-related ones,” Such said. “Our compliance team regularly blocks or suspends users as part of our stringent [anti-money-laundering standards, but nothing very notable has happened.”
