Can prediction markets foresee elections? California’s results offer clues
They’re called prediction markets, but how well do they actually predict the future? Millions of bettors put money on political races through popular sites like Kalshi and Polymarket.
Popular wagers in recent weeks focused on the California gubernatorial and Los Angeles mayoral races.
So, how well did the prediction markets predict what really happened?
Prediction results
Pretty much a coin toss.
When it came to predicting who would finish first in those races, the prediction markets were fairly accurate.
Specifically, that former Health and Human Services Secretary Xavier Becerra would take the top spot in the governor’s race and incumbent LA Mayor Karen Bass would take first in her reelection bid.
When it came to who would join Becerra and Bass in the November general election, the prediction markets weren’t as accurate.
In the governor’s race, billionaire Tom Steyer was second on the prediction markets.
Despite spending more than $200 million of his own money, Steyer finished third, behind Becerra and the Republican, former Fox News Host Steve Hilton.
Betters on Kalshi mostly nailed the top three in that race.
When it came to the LA mayoral race, prediction markets typically saw Republican and reality TV star Spencer Pratt running behind Bass.
Ultimately, it will be LA Councilwoman Nithya Raman who takes on Bass in the general election.
Prediction markets vs polls
Prediction markets are not polls.
“We can make a relevant claim about their accuracy,” Robin Hanson, associate professor of economics at George Mason University, told Straight Arrow about prediction markets. “What we see is that unmodified markets are better than unmodified polls.”
That’s true in the case of the 2024 election, according to a recent study from Vanderbilt University.
“Prediction markets work better, they really do,” Tarek Mansour, Kalshi CEO, told The Block at the time.
However, polling measures what a sample of voters says they plan to do, while prediction markets measure what traders collectively believe will actually happen on Election Day.
In essence, polling asks voters what they plan to do.
Prediction markets ask who they think will win.
“Polls versus markets isn’t really the best framing,” Hanson said. “A poll is an input into an estimation process, and the market is a forum in which different people using different estimation processes compete.”
One of the major differences between the two is that polling samples potential voters from specific areas, whereas anyone in the world can participate in prediction markets.
So, while a poll of Angelenos can examine what that group may feel about their mayoral election, prediction markets are taking in data from massive groups of people who will not be voting.
“You have people playing prediction markets who don’t have to live in the United States, they certainly don’t have to live in California, they don’t have to be 18 years of age and up, meaning they’re not necessarily eligible to vote,” Darry Sragow, longtime California political consultant and Democratic strategist, told Straight Arrow.
Election impact
Kalshi wasn’t legalized in the U.S. until late 2020, while Polymarket didn’t get legal status until late 2025.
Compare that with modern-day presidential polling, which began roughly 90 years ago when George Gallup’s polling method correctly predicted the election of former President Franklin D. Roosevelt.
“Private polling and opinion research, including focus groups, has nothing to do with predicting who’s going to win,” Sragow said. “It’s about crafting a winning campaign.”
But will candidates and their campaigns need to start paying attention to prediction markets the same way they look at polls to see where they stand?
“It’s too early to tell,” Sragow said. “It’s a new phenomenon.”
Then there’s the potential impact on voter behavior.
Prediction markets tend to list who the general public believes will win an election, and voters like to be on the winning side.
“There is this underlying phenomenon that’s very evident when you’re running a campaign, but doesn’t get talked about a lot publicly, and that is that the voters want to pick a winner,” Sragow said. “They hate picking a loser.”
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Ella Rae Greene, Editor In Chief
