On election eve, Arlene Battishill, a retired history professor and political analyst known as "Dr. Arlene Unfiltered" to her social media followers, picked up a bottle of champagne, confident in the data across different states that showed a potential Kamala Harris win.
But a different narrative had emerged on Polymarket, a decentralized prediction platform founded in 2020, built on blockchain technology and banned in the U.S. It had consistently shown Trump leading since his September debate with Harris, and it ultimately proved more accurate than conventional polling methods that showed the race in a dead heat.
"This is the third consecutive presidential election in which [Donald] Trump was underestimated by polls," said Harry Crane, a professor of statistics at Rutgers University. "The betting markets were spot on in this cycle, despite attacks from the mainstream media and pollsters, both of which were wrong in their analysis."
The results, supporters say, bolster the case for prediction markets as they become more mainstream and seek to expand election betting in the U.S.
Polymarket's 26-year-old CEO, Shayne Coplan, celebrated on CNBC's Squawk Box after the election, calling it an “inflection point in news and politics." Polymarket "was a good two, three hours ahead of the media,” Coplan said. “If you were just watching TV, you’d think it’s neck and neck.”
But "Dr. Arlene," in a Q&A session with her followers, predicted that "a lot of people are going to lose a lot of money" on the platforms.
"People are going to get slaughtered financially. It's the most irresponsible thing to be betting on our democracy," she said.
Legal tussles follow momentum
Launched in 2020, Polymarket secured a $70 million funding round in May 2024 led by Peter Thiel's Founders Fund and Ethereum founder Vitalik Buterin. Major media outlets like CNBC and The Economist now regularly cite its predictions. Bettors put billions of dollars on the presidential race before Election Day.
Coplan told CNBC he received election-night calls from Mar-a-Lago, where the Trump campaign was tracking his victory on Polymarket. “It was surreal,” Coplan said.
Days later, the FBI raided Coplan's New York City home and seized his electronics — part of an investigation into Polymarket allegedly accepting trades from U.S.-based users, Bloomberg reported. Coplan suggested the raid was politically motivated, posting on X: "It's discouraging that the current administration would seek a last-ditch effort to go after companies they deem to be associated with political opponents."
At competitor Kalshi, Americans legally bet $100 million on the presidential race after the platform successfully challenged the U.S. Commodity Futures Trading Commission's ban on election betting in October, NPR reported. The decision by Biden-appointed Judge Jia Cobb marked a return to a practice that was commonplace in American races until the turn of the 20th century. The CFTC has appealed the ruling.
Kalshi, which attracted about $1 billion in overall bets on the election, headed back to court in November to counter the appeal, saying that only Congress has the authority to ban election betting.
Critics remain unconvinced. "It's pure gambling. Election betting can forecast the future no better than gambling whether or not you'll get 21 in blackjack," said Cantrell Dumas, director of derivatives policy at Better Markets.
"It's just preposterous to think that gamblers are able to call the election," Dumas said.
The future of predicting elections
Traditional polling's credibility took another hit in the 2024 presidential race. Ann Selzer called it quits after her Iowa poll predicting a Harris win missed by double digits. A Rutgers-Eagleton poll showed a huge lead for Harris that turned out to be much narrower.
A common argument for prediction market advocates is that betting on election outcomes is more "pure" and in line with market forces than traditional polling, which they say can be politically biased and manipulated.
"Betting markets incentivize being right and disincentivize being wrong. If you're right you make money, if you're wrong you lose money," said Crane, the Rutgers professor. "You can't say the same about polling. Pollsters continue to put out polls cycle after cycle even when they are badly wrong."
While nobody knows the long-term future of prediction markets in the U.S., the Trump administration's return to power could reshape it for betting enthusiasts, he said.
"If the new administration follows through on its promise of promoting liberty and eliminating needless bureaucracy and regulation, then the betting markets will flourish in the coming years," Crane said. "I expect that election betting markets will continue to grow in popularity and will be much larger and more widely accepted next time around."
