Nearly $1.3 billion was wagered on the 2026 U.S. midterm election outcomes through Kalshi, a prediction market platform, as voters cast ballots across the country. The markets correctly identified the eventual winner in 98% of federal contests, according to the company’s internal analysis of 2,243,741 resolved markets from 2021 through mid-2026.
The surge in prediction market activity followed $12.8 billion in political advertising spending during the election cycle, the most expensive in U.S. history. In Texas, the Senate race alone drew preliminary estimates of $573 million, ranking among the costliest non-presidential contests on record.
How prediction markets performed
Kalshi’s markets not only predicted non-competitive incumbents with high confidence but also reflected the narrow margins in key battleground races. The platform’s post-election review found its forecasts aligned with final results in 98% of tracked federal contests, including races where polling had suggested tight margins. The company did not provide a breakdown of state-level or local contests.
Prediction markets operate by allowing participants to buy and sell shares tied to the probability of specific outcomes, such as which party will control the U.S. House or Senate. Traders profit if their predictions align with reality, while losses accrue if they do not. Kalshi, which launched in 2021, has expanded its offerings to include markets on economic indicators, sports, and entertainment events.
Regulatory scrutiny and industry growth
The growth of prediction markets has drawn regulatory attention. Some states have moved to ban or restrict these platforms, while federal lawmakers have raised concerns about their potential impact on elections. Critics argue that prediction markets could be manipulated or used to spread misinformation, though proponents contend they provide a transparent alternative to traditional polling.
The 2026 midterms marked the first major election cycle where prediction markets operated at this scale. The $2.5 billion wagered on Kalshi alone exceeded the total spent on political betting in previous cycles, reflecting increased public and institutional interest in the model. The platform did not disclose the number of active traders or the distribution of wagers across races.
Comparisons to polling accuracy
Prediction markets outperformed many traditional polls in the 2026 midterms, which had faced criticism for underestimating certain outcomes. While pollsters did not release a comprehensive post-election analysis, early reviews suggested that prediction markets provided more accurate forecasts in several key races. Analysts attributed the discrepancy to factors such as late shifts in voter preferences or polling errors in specific demographics.
Kalshi’s performance has fueled debates about the role of data-driven forecasting in politics. Supporters argue that prediction markets offer a real-time, crowd-sourced alternative to static polling, while skeptics question their reliability in low-turnout or highly polarized elections. The platform has not released detailed methodology on how it adjusts for market biases or external shocks.
Market expansion and future outlook
Beyond elections, Kalshi has expanded into other domains, including economic data releases and sports betting. The company’s success in the 2026 midterms has prompted discussions about the broader adoption of prediction markets for policy forecasting, corporate decision-making, and public health predictions. However, regulatory hurdles and concerns about market manipulation remain obstacles to wider integration.
The platform’s growth has also sparked interest from institutional investors, who see prediction markets as a tool for hedging political risk. Kalshi has not disclosed whether it plans to introduce new types of markets or partnerships in the near term.