• Prediction markets moved in Trump’s favor as polls showed a virtual tie in the weeks before his victory.
• Supporters point to a number of factors that make betting markets more accurate.
• If polls don’t improve, they say, the public may begin to rely more on prediction markets.

In the weeks before Donald Trump’s death victoryPolls showed the former president in contention with Vice President Kamala Harris.

But prediction markets told a different story.

Trump began showing solid leads on betting markets like Polymarket, PredictIt and Kalshi in mid-October, with those odds mostly rising in the weeks before Election Day.

The odds had narrowed slightly over the previous few days, but when the first major polls closed at 6 p.m. ET on Tuesday evening, markets were showing about a 60% chance in Trump’s favor.

They reacted quickly to the flood of results from individual states, predicting at 1:30 a.m. Wednesday that Trump had a greater than 98% chance of winning. Election Betting Odds tool.

This was hours before major news organizations announced the election

Prediction site founders and researchers have been studying betting markets for a long time. more accurate according to traditional voting. This week was the biggest demonstration supporting that claim.

“These have always been true. They’re getting a lot more traction now,” Tarek Mansour, co-founder of prediction marketplace Kalshi, told Business Insider. Kalshi is the only betting site where US users can bet on political races.

Kalshi said he saw a huge influx of traffic on election night, with 123 million site views occurring in the 24 hours before the race was officially announced.

Mansour says these figures point to increased trust in betting markets among voters, which will help platforms like Kalshi stand out in the mainstream.

“I don’t think we’re going back. I think this is the dawn of a new era for prediction markets, and prediction markets are now stay here“People are not going to go back to mainstream news and polls after this. Prediction markets are basically the ultimate thing people are going to look at right now,” Mansour added.

Why did the betting markets get it right?

Betting experts say prediction markets have several key advantages over polls, and much of it depends on the motivation behind the participants rather than asking who the voters are. wants Prediction markets ask who they are to win to think will win.

Risking money (potentially tens of millions of dollars) a french merchant— means that participants have to be very confident in their predictions. This means that those with higher faith and potentially better knowledge are particularly attracted to the sites.

If an investor is willing to invest that much money, they must have a particularly high degree of conviction in their bets and rely on information that is not publicly available or simply observers who keep a close eye on the latest developments, said Harry, the Rutgers University statistics professor. Crane told BI.

Experts also point to the ability of prediction markets to respond to new developments in real time, according to Thomas Miller of Northwestern University; This has proven particularly powerful this year given a series of highly impactful events.

Miller, who runs the election forecast model Virtual ToutHe points to particularly large swings after President Biden dropped out of the race and endorsed Harris, as well as two assassination attempts on Trump.

He said that while the polls were lagging, the markets reacted immediately.

“Prediction markets can be volatile. They can be sensitive to current and campaign events. They move, and they can move significantly. This election is an extreme example of that,” Miller said.

Others also point to the massive volumes traded this election cycle and say prediction markets will only become more accurate with more volume.

Crane says that if the CFTC’s strict regulations on betting markets allow more U.S. participation, it will increase volume and make any attempts at market manipulation less likely to actually work.

“I think if we want to have better, cleaner, more accurate markets, no restrictions are actually the way to go,” Crane told BI in a previous interview.

Proponents of the prediction market say the polling failure will likely put pressure on pollsters to be better in coming election cycles.

“Prediction markets are basically the last thing people are looking at right now,” Mansour said. “That’s going to put pressure on the polls. The polls have to get better, otherwise people won’t trust them.” in question.

If they did not evolve, he predicted, betting markets could replace them entirely.

But others are skeptical even after the last election.

Davide Accomazzo, a professor of finance at Pepperdine Graziadio Business School, says the final result of the election fell within the margins of error of traditional polls, indicating that they are not necessarily flawed but need to be improved.

“The final result was not outside the statistical margin of error that the polls showed. But what’s interesting is that every single margin of error was in Trump’s favor. So that tells you clearly that something is fundamentally wrong. Given the nature of these traditional polls,” he said, adding that this is unconventional. He added that it could highlight a mistake in underestimating a candidate.