By Suzanne McGee, Douglas Gillison and Chris Prentice
NEW YORK, Nov 3 (Reuters) – When polls close in the US midterm elections on Tuesday night, Noah Poser will be glued to his phone tracking dozens of large wagers he placed on prediction markets.
Poser, 28, who works in financial technology and has written about betting strategies in such markets, plans to track every change in the vote count from a friend’s watch party in New York City.
He said he has wagers with a total value in the six figures on the line, betting on a strong showing by Democrats, and entered the bets a few months ago when odds were at a much better price. If he wins, he estimates profits of as much as $30,000.
“It’s a numbers game; you have to strip your emotions out of it,” said Poser, the author of a self-published book about his prediction markets strategies. Poser built a quantitative model for trading these markets based on a career in Wall Street technology systems.
He will not be alone on Tuesday evening. Across the United States, people are betting on this year’s midterm races at record levels for US election betting.
Prediction markets rose to prominence in 2024 when they bucked traditional opinion polls in signaling that Donald Trump would win the presidency. The platforms allow traders to buy and sell “yes” or “no” contracts on an array of race outcomes and variables, and there is more than $1.4 billion wagered on the midterms, according to the platforms and industry research.
SWEAT AND PANIC SELLING
Among those placing bets is Darius Gamble, 51, in Gardendale, Alabama, who said he has been betting on the platforms for two or three months but won’t wager more than $20 on anything.
“It is gambling, just disguised as predictions,” said Gamble, who is a human resources business partner. “It gives you a gambling rush.”
Another hopeful with money on the line is Yadin Eldar, a 22-year-old student at Florida State University.
While he anticipates large-scale Democratic victories, Eldar is opting for a contrarian strategy by placing bets on races where his analysis shows the odds of Republican candidates emerging victorious are “extremely underpriced.”
“You can make a 50-55% profit on Republicans winning in Florida,” he said in an interview.
Still, betting on elections is stressful, said Eldar, who may leave his own phone at home when he heads to an unrelated birthday party on Tuesday night.
“The emotional roller coaster is extremely dangerous,” he said. “It never does me any good. I panic sell or panic buy.”
MORE MAINSTREAM
Large-scale events are also taking advantage of the exploding interest.
A packed gathering of more than 2,000 prediction markets traders, investors and platforms in October in New York called NEXTPredict featured several sessions devoted to election contracts.
“It’s a very different vibe than we had in 2024, when prediction markets were really new and kind of upstarts,” said Lucas Kohorst, co-founder of Adjacent Markets, a platform that this summer raised $2.5 million to help build out its business aggregating contracts into tradable indexes or benchmarks.
Adjacent’s Democrat Political Futures Index has climbed 2.38% in the last seven days, while its Republican counterpart has edged up 0.14%.
Late last week, Kohorst and his team decided to fly from New York to Chicago to attend an election eve watch party hosted by Kalshi, a top prediction market that joined financial market stalwarts like the Options Clearing Corporation as a silver-level sponsor of the Futures Industry Association’s annual conference.
“This time, prediction markets seem to have joined the mainstream,” Kohorst said.
Kalshi did not respond to requests for comment on the event.
VEGAS
Even in Las Vegas, spiritual home to an industry that strongly opposes such platforms, prediction markets aficionados are seizing on the midterms as a way to distract gamblers from the blinking slot machines and spinning roulette wheels in the Strip’s casinos.
Peter Klamka is wagering that the elections will transform his just-launched Prediction Vegas bar into a hot new destination, as he prepares to host the Prediction Markets Conference industry gathering on Tuesday evening.
“No casinos will be showing elections,” Klamka said. “From a Vegas standpoint, I’m it.”
Nevada has severely restricted prediction market offerings. But Klamka says many of his out-of-state clientele make their trades before arriving.
That’s why Ish Milly, the organizer of the Vegas prediction markets conference, sees the election party as only one small part of the story.
“Ultimately, we’re more interested in the long-term development and credibility of the industry than the outcome of any single election,” he said.
(Reporting by Suzanne McGee in New York, additional reporting by Douglas Gillison and Chris Prentice; editing by Megan Davies)
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