WBUR examines election prediction markets’ rise and insider-risk concerns

WBUR’s Here & Now examined the surge in election prediction markets on Oct. 5, as wagers on politics and the midterm elections grew on platforms including Kalshi and Polymarket.

Host Scott Tong interviewed Michael Hornsby, co-director of the Anti-Corruption Data Collective, about insider-trading and corruption risks, how market prices should be read alongside political polling, and whether the markets themselves could affect election outcomes.

The discussion came as election contracts accounted for 23% of Polymarket’s political markets but 54% of political-market trading volume, according to an ACDC analysis of settled markets. Political markets overall made up 4% of the platform’s markets, yet generated more than 36% of its trading volume.

ACDC’s dataset covered about 435,700 Polymarket markets settled from January 2021 through the first half of March 2026, with $54.4 billion wagered in total. It counted about 22,200 political markets and $19.7 billion in political-market wagers.

The group’s central concern is that markets resolved by militaries, executive administrations or central banks can give people with non-public information an advantage. It classified such outcome-maker markets as high risk; they represented 34% of political markets, 42% of political-market volume and about $8 billion in trading.

Its analysis found that 25% of large political longshot bets succeeded, compared with 14% across all categories. ACDC defined a longshot as a wager of at least $2,500 on an outcome priced at 35 cents or less, implying a probability no higher than 35%.

Military and defense markets were a sharper outlier, with a 52% success rate for longshot bets. ACDC found that successful bets in those markets rose shortly before settlement, with more longshots placed on the eventual winning outcome than the losing outcome in the final 12 hours.

The organization also argued that Polymarket’s blockchain-based but pseudonymous activity can allow high-frequency traders to spot possible insider trading and trade on the apparent signal in real time. More granular contracts, such as those asking for an exact date rather than a month, can lower prices and increase the potential return for anyone holding privileged information, its analysis said.

As reported in September, ACDC separately found that a $3,500 wager could move almost every congressional prediction market it studied by at least five cents.

Prediction-market advocates see a different use for the prices. A Vanderbilt Law School legal evaluation said some experts regard the markets as a potentially faster gauge of public opinion than conventional polls, while noting that the industry’s legal framework remains unsettled. It put total trading across prediction-market platforms at $44 billion in 2025.

Kalshi has operated as a Commodity Futures Trading Commission-regulated designated contract market since 2020. Its election contracts survived a CFTC challenge after the D.C. Circuit held that the agency could bar contracts involving conduct illegal under state law, but that elections themselves were not illegal activity.