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The stories that matter on money and politics in the race for the White House
Millions of dollars in new wagers are being placed on the US presidential race — narrowly favouring Donald Trump — as fledgling platforms chase bets from professional investors following the lifting of a domestic betting ban last week.
Kalshi, whose court victory in Washington over a US regulator opened the market, is offering institutional investors the opportunity to put as much as $100mn on either Kamala Harris or Trump for a win in November.
In the first days since the ban was lifted, more than $12mn has been wagered, and the company was in the process of setting up several institutional players on the platform, Kalshi founder Tarek Mansour said. Those amounts are expected to continue growing as election day nears and more traders are attracted to the platform.
The bets are structured as so-called binary options — all-or-nothing wagers priced at up to $1 a contract — where the winner keeps the dollar and the loser forfeits it. The price ahead of the event fluctuates depending on its perceived likelihood.
Contracts betting on a Trump win on Monday changed hands at 54 cents while those backing Harris were priced at 47 cents, widening a narrow gap that had swung between 51 cents and 49 cents for each candidate in the early days after the market went live just over a week ago.
The ability of Kalshi and others to offer the contracts to US residents stems from an appeals court ruling last week that lifted an emergency stay requested by the Commodity Futures Trading Commission, the regulator that blocked the platform’s initial application to list elections contracts.
The watchdog argued election bets were akin to gaming, and they risk damaging the integrity of the democratic process. The court lifted the stay, ruling the CFTC had not proved harm to the elections. The regulator’s appeal against a lower-court ruling in favour of Kalshi is ongoing.
“It’s the same as in futures markets,” said Steve Sanders, head of marketing and product development for Interactive Brokers, which launched its own events contracts following Kalshi’s court win.
“There are people hedging against risks and there are speculators taking a view on short-term market moves. Both play an important role,” he added.
Grant Ferguson, a political scientist and longtime follower of prediction markets at Texas Christian University, said: “You may want more institutional money because while these investors might have their own particular political views, they’ll have studied the outcome and their wagers represent especially informed opinion.”
The lifting of the ban has in effect freed onshore exchanges to offer the same kind of contracts on US elections already available overseas and on offshore crypto-based platforms.
UK-based bookmaker Betfair has, as of Monday, had £85mn ($111mn) placed on the winner of the US election. Total US election betting, also including battleground states and majorities for both chambers of Congress, totalled £136mn, according to its website.
More than $1.9bn has been staked on the presidential contest on offshore platform Polymarket, whose users wager in cryptocurrency and which does not technically allow US citizens to bet. Big bets on Trump in recent days from one user helped push the former president to 56 per cent and Harris as low as 43 per cent. On Monday, the pair stood at 55 per cent and 45 per cent respectively.
Rajiv Sethi, an economist at Barnard College, part of Columbia University, said: “The closeness of the race has made the volumes on these markets substantially greater — and also the closeness in individual states. All sorts of combinatorial possibilities exist.”
Volumes are likely to rise 10-fold as polling day draws closer, according to PredictIt, an onshore US site that operates under a 2014 arrangement based on its use in academic research. The platform, which limits users to $850 maximum bets, is separately fighting in court against closure by the CFTC.
“It also generates interest when well-intentioned but misguided government agencies try to shut this stuff down,” said John Aristotle Phillips, founder of PredictIt. “These markets are not just valuable and important — and legal and constitutionally protected in my opinion — but they’re also a lot of fun. It’s engaging if you have a little skin in the game.”
One factor affecting different sites’ pricing could be when they are prepared to declare the contest over. Presidential contracts on Kalshi and PredictIt resolve — that is, pay out winners — when the electoral college votes are cast or a victor is inaugurated. Polymarket’s are based on when the Associated Press, Fox News and NBC call the contest for the same winning candidate.
Phillips cautioned against expecting a quick resolution to the election — or the end of swings in the pricing of the contracts.
“If the past is any guide, these markets may continue to shift after election day,” he added.
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