During the summer, Shayne Coplan, CEO of Polymarket, shared insights on a Netflix documentary about the significance of the 2024 US Presidential Election for the prediction markets sector. After a pivotal court ruling, prediction markets emerged as a legal avenue for Americans to trade on political contracts, particularly as Donald Trump defeated Kamala Harris decisively. Despite other networks announcing a tightly contested race in their final polls, Polymarket provided Trump with about a 58% chance when polling closed on Election Night. A commentator on Fox Business remarked, "Polymarket was spot on the entire time."
"That was one of the most gratifying moments ever," Coplan recalled during the documentary, Instadoc: The Prediction Games. "From that moment on, there was a level of credibility that prediction markets changed entirely."
Fast forward two years, and the popularity of event contracts related to the 2026 US midterms has skyrocketed, prompting discussions about whether the collective wisdom of crowds might eventually supplant traditional polling methods. As of October 15, over $750 million in notional volume was traded on these new platforms, marking an almost eight-fold increase compared to trading in Congressional and state races in 2024.
In the past, Americans had engaged in $92.4 million worth of transactions on other election contracts surrounding the presidential race. Today, over 21,000 midterm offerings are available on Kalshi and Polymarket, as reported by the Anti-Corruption Data Collective. After the midterms conclude, trading volumes for these races could soar to $1.6 billion, according to the nonprofit research body.
James Surowiecki, an author featured on the Netflix program, commented, "These midterms are going to generate a lot of interest because there’s a lot at stake in them. In that way, this is one of the biggest tests for prediction markets."
Meanwhile, the NBA has moved to enhance the integrity of betting markets by agreeing on Friday to prohibit specific prop wagers. This announcement comes ahead of the league's regular season opener, where the New York Knicks will celebrate raising a championship banner for the first time in over 50 years. Amid a wave of scandals involving prop manipulation, several former players are facing trials scheduled in the coming months.
The NBA's new directive restricts prop bets on certain reserve players. Generally, for those expected to play less than 12 minutes in a game, sportsbooks will refrain from offering props related to their individual statistics. Additionally, customers are now barred from placing multiple "unders" on a single player’s statistical outputs. For example, bettors will not be able to wager the "under" on LeBron James's points, rebounds, and assists in one game. Notably, while the sportsbooks eliminated these combo bets, Polymarket continues to offer them, with a $10, three-leg combination bet on LeBron's debut with the Philadelphia 76ers yielding a payout of $14.19. As of Friday evening, Kalshi had not listed similar markets for NBA game under combos.
Despite engaged discussions with the US Commodity Futures Trading Commission (CFTC) aimed at creating an integrity framework for basketball-related event contracts, the NBA has not yet established a Memorandum of Understanding with the agency. In an interview with ESPN, NBA executive vice president Scott Kaufman-Ross acknowledged the challenges of enforcing prop restrictions in the absence of an agreement.
Shifting focus to regulatory developments, last week the CFTC did not unveil any major updates, a departure from previous announcements. The ongoing discourse over whether sports event contracts should be treated differently from traditional sports wagers continues to attract attention. The CFTC maintains that it retains exclusive jurisdiction over derivatives regulation, a position that many state attorneys general contest, potentially leading to a Supreme Court confrontation.
On October 9, the CFTC issued a Notice of Proposed Rulemaking, which, if approved, would broaden the definition of financial swaps to include event contracts for sports and politics. Several higher courts have already denied the assertion that sports derivatives should override state laws concerning sports betting.
In a recent interview, CFTC Chair Michael Selig reiterated the Commission's focus on curbing problematic practices in commodity markets, like insider trading and manipulation, while also addressing ongoing investigations into suspicious trading activity. Reports indicate that the CFTC and the Justice Department are probing $2.6 billion in unusually timed oil trades linked to the start of the US-Iran conflict. Additionally, the Wall Street Journal disclosed that the CFTC is investigating approximately $5 billion in trading involving bitcoin perpetual futures on Kalshi, which has denied any allegations of wash trading.
Selig clarified the regulatory framework, stating, "We regulate these in our derivatives markets every day, whether it’s oil or any type of commodity. My concern is that you can’t offer an order book in a casino; that’s not how these wagers work when they are placed with a bookie."
