Prediction markets and political elections are much more intertwined than one might imagine. According to a recent study by the Brennan Center for Justice, speculative odds from political event contracts measurably influence voters.
Prediction Markets Have a Measurable Effect on Voters’ Opinions
Through partnerships with major news outlets such as CNN, CNBC, and Fox News, election prediction market odds have become increasingly accessible to the general public. These odds are frequently presented alongside, or even as substitutes for, traditional polling figures, despite being generated through fundamentally different methods.
In the study, respondents were asked to identify the likely winner in pairs of hypothetical congressional races. For each candidate, they received information about background characteristics, such as race, age, party affiliation, and previous occupation.
A key data point that respondents were given was the estimates of the candidate’s chances of winning from NBC News polls and prediction market operator Kalshi. The polling figures and prediction market odds were randomly varied to assess how respondents reacted when the two sources offered conflicting predictions.
The findings indicate that prediction market odds significantly influence voters’ expectations about electoral outcomes. Candidates with higher odds of winning on Kalshi were more likely to be perceived as the projected winners. Specifically, a candidate with a 67% chance of winning was 10% more likely to be identified as the likely winner than a candidate with 50% odds. And when a candidate’s odds increased to 84%, their perceived likelihood of winning rose by 20%.
One possible way to mitigate these effects is to warn voters about the limitations of prediction markets. However, the study found that such warnings did not reduce voters’ reliance on prediction market odds when assessing likely election winners. These findings suggest that more stringent regulation of prediction markets may be necessary, the Brennan Center for Justice argues.
Even Prediction Market Skeptics Can Be Swayed by Them
The Brennan Center’s data shows that voters can be swayed, despite many of them being skeptical of prediction markets. Only 19% of voters considered election prediction markets accurate, compared with 37% who expressed the same view of traditional polls. Similarly, just 29% believed that election prediction markets reflect public opinion accurately. Meanwhile, 55% said the same of conventional election polling.
About 48% of participants in the study favored stricter regulation of prediction markets, while 23% supported banning certain types of these markets entirely. An additional 16% believed that all types of prediction markets should be prohibited.
Speaking of regulating prediction markets, many states have taken it upon themselves to attempt to do so. Recently, for example, Ohio is preparing legal actions against the likes of Kalshi and Polymarket after the Ohio Casino Control Commission has already issued cease-and-desist notices to them and other companies.