THE MORNING RANT: A Reminder that the Purpose of Election Prediction Markets Isn’t to Gauge Voter Sentiment but to Influence It

Early voting is under way for the mid-term elections, and Election Day itself is just eight days away. So today is a good day to remind everyone that as biased and unscientific as modern polling is, prediction markets are just as flawed in assessing political races. The reason is that they are not “prediction” markets at all. While they are sort of a gambling forum, they are also a mechanism for partisans to use their own money to influence election reporting in favor of their candidates, and Democrats are much more passionate about spending money this way than Republicans are.

In a piece back in May, I documented two Georgia Supreme Court races in which Polymarket showed the leftists’ odds of winning both exceeded 80%. Both candidates lost by crushing margins to the conservative candidates.

There is currently a flood of stories out now touting “predictions” from Polymarket or Kalshi that are favorable to Democrats and the left, including James Talarico in Texas. Kalshi is stating as a fact that Talarico has a 65% chance to win, approaching a “new all time high.”

Talarico does NOT have a 65% chance of winning, and for Kalshi to state that as a fact indicates that Kalshi does not even know what its product is. While I can state with a high degree of confidence that Talarico will lose to Republican Ken Paxton by a significant margin, the reason money is flowing to Kalshi in favor of Talarico is to get favorable headlines and to create a false aura of invincibility.

People putting money on Talarico are neither gamblers nor investors – they are engaging in a modern form of campaign contributions. It’s a rational decision, actually. TVs in Texas are already blanketed with Talarico ads, and mailboxes are full of his flyers. Giving money to his campaign would just buy more unread mailers. Putting that same money in a prediction market is a different way of contributing.

Of course, with the left willing to steer their campaign contributions to distort prediction markets, that creates a profitable opportunity for those willing to gamble in the opposite direction. Perhaps that opportunity will eventually neutralize the current distortion of prediction markets.

Comparing political polls to political prediction markets is an interesting exercise, and John Solomon of “Just the News” has announced a partnership with Kalshi to do just that. I’m a big fan of Mr. Solomon and “Just the News” and I will be following this initiative, but as I’ve just discussed, I respectfully disagree with Mr. Solomon that those putting money on political races in Kalshi are “investors.” They are contributing to a political campaign, not investing.

[buck.throckmorton at protonmail dot com]

posted by Buck Throckmorton at 11:00 AM

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