Midterm Election Betting Skewed by Concentrated Wallet Activity on Polymarket

The U.S. midterm election on Nov. 3 is less than 11 weeks away, and prediction‑market betting has already exceeded the total volume recorded for the entire 2024 congressional cycle.

Volume surge and market expansion

By Aug. 10, traders had placed at least $133 million on contracts tied to House and Senate races, compared with $92.4 million recorded for the full 2024 cycle. The number of comparable markets grew from 464 to 7,466, covering primaries, vote shares, turnout, endorsements, candidate remarks and winners.

Concentration of participation

Analysis of Polymarket Global shows that the top 1 % of wallets contributed 68 % of congressional‑related volume. Ten wallets alone accounted for 17 % of the total and traded contracts covering 426 of the 470 seats on the ballot.

Overall, 80 % of Polymarket’s congressional markets had fewer than 100 participating wallets, and only ten markets surpassed 1,000 participants – a scale comparable to many political polls.

Implications for perceived consensus

Prediction‑market prices reflect the amount traders are willing to pay for a $1 payoff if an event occurs. When a small number of well‑funded wallets dominate a contract, the displayed probability can appear to represent broad public opinion even though few participants supplied the data.

Media outlets, campaign donors and candidates increasingly cite these market odds as real‑time indicators, creating a feedback loop where the price influences political narratives and, in turn, provides new information for traders.

Regulatory context

The CFTC has highlighted enforcement cases on its designated contract market Kalshi, freezing accounts and imposing penalties for alleged insider trading. Polymarket operates under a separate, pseudonymous enforcement structure, making identification of traders more challenging.

Upcoming CFTC rulemaking aims to clarify listing standards, consumer protections and product governance for event contracts, but it will not address market concentration directly.

Outlook

Projections suggest total midterm betting volume could reach $1.4‑$1.6 billion by Election Day. Regardless of the final figure, the disparity between total dollar volume and the number of distinct participants raises questions about the reliability of prediction‑market odds as a proxy for mass public sentiment.