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- A study found 94% of 11,000 congressional election prediction markets shift 10% in probability on bets under $1,000.
- Kalshi and Polymarket defended market integrity, arguing trader incentives quickly correct mispriced odds created by small wagers.
A new study says U.S. congressional election prediction markets on Kalshi and Polymarket can be moved by relatively small bets, raising new questions about how reliable those odds are as signals of political sentiment.
Reuters reported that research published Wednesday by the Anti-Corruption Data Collective found many markets were highly sensitive to small trades. The issue matters because election prediction markets are increasingly cited in political coverage, even as operators argue that mispriced odds tend to correct quickly.
Study points to sharp price moves on small trades
According to the report, in more than 11,000 markets tracking congressional races this year, 94% would see a movement equivalent to 10% in implied probability after a single bet of less than $1,000.
In hundreds of cases on Polymarket, the researchers said, markets held those new levels for 24 hours and typically around four days.
Michelle Kendler-Kretsch of the Anti-Corruption Data Collective said the findings showed key conditions for accurate pricing were not being met in markets tied to the November midterms and primaries. Reuters described the study as concluding that these election markets were “extremely vulnerable” to manipulation.
The report covered markets on Kalshi, Polymarket and Polymarket’s U.S. platform.
Kalshi and Polymarket dispute the report’s implications
Both operators pushed back on the idea that temporary price moves necessarily undermine market integrity.
Kalshi said a recent company case study found that prices in a market concerning former Los Angeles mayoral candidate Spencer Pratt corrected in just nine seconds after more than $1 million was poured into it.
A Polymarket spokesperson told Reuters that when odds become mispriced, other traders have an incentive to move them back. “They are incentivized to get the price back to what you would expect it to be,” the spokesperson said.
Why the findings matter
Prediction market operators let users wager on outcomes ranging from sports and elections to war and drug trials. As those markets gain visibility, concerns about how easily prices can be moved could affect confidence in election-related contracts and in media reports that cite market odds as a proxy for expectations.
What comes next is less clear. Reuters said the study raises manipulation concerns, but the report did not resolve how regulators may respond or whether operators will change market design or monitoring as a result.
Source: As reported by Douglas Gillison.
