The presidential race is heating up with just a month to go before Election Day, and two U.S.-regulated, dollar-denominated prediction markets have entered the fray. Kalshi and Interactive Brokers’ ForecastEx have both launched their presidential markets this week, allowing traders to bet on the outcome of the upcoming election.
Despite a slow start in terms of trading volume, with $344,101 worth of contracts traded on Kalshi and $346,000 on ForecastEx, these platforms are hoping to attract more users in the coming weeks. In comparison, Polymarket, a crypto-powered prediction market platform, has seen over $1.2 billion in bets placed on the race between Kamala Harris and Donald Trump. While Polymarket is not accessible to U.S. users under a CFTC settlement, some Americans have reportedly been using VPNs to participate in the platform.
According to experts like Koleman Strumpf, an economics professor at Wake Forest University, there is still potential for Kalshi and ForecastEx to catch up to Polymarket. With more than half of all trades expected to occur between now and Election Day, there is still time for these platforms to attract more users.
However, Aaron Brogan, a managing attorney at Brogan Law, pointed out that Polymarket has certain advantages over its competitors. For one, Polymarket is accessible to people worldwide, while Kalshi has restrictions on certain groups. Additionally, Polymarket does not have explicit position limits, which could impact the total market size compared to Kalshi.
In terms of pricing differences, early trading on Friday showed Harris leading Trump on both Kalshi and ForecastEx, with slight variations in their odds of winning. Despite these differences, experts like Harry Crane, a statistics professor at Rutgers University, believe that these discrepancies are not significant and may not present profitable arbitrage opportunities.
Kalshi’s legal battle with the CFTC last year resulted in the company winning the right to list congressional contracts, which were briefly frozen before being revived. The CFTC is currently appealing the decision but has allowed the presidential contracts to trade leading up to the election.
As the election draws near, these prediction markets will continue to attract attention from traders and analysts alike. With the outcome of the race still uncertain, these platforms provide a unique opportunity for people to make their predictions and potentially profit from the results.