Research from the Anti-Corruption Data Collective (ACDC) has found that despite $431 million wagered on US congressional prediction markets ahead of the midterm elections, the odds in most markets can still be shifted significantly for relatively small sums. The study, covering nearly 29,000 markets across Kalshi, Polymarket, and Polymarket US, suggests that even in the days leading up to Election Day, a five-cent move in odds can often be achieved for less than $3,500.
Majority of Markets Remain Thinly Traded
According to ACDC, 96% of live congressional markets could be shifted by five cents for $3,500 or less, and 66% could be moved for under $100. Even the most robust markets in each of the 470 congressional races were typically vulnerable to moves of this size for less than $25,000. The research highlights that, despite increased trading activity and a sharp rise in the number of available markets compared to previous cycles, liquidity remains shallow in most.
Transparency and Market Integrity Concerns
ACDC researcher Michelle Kendler-Kretsch raised concerns about the transparency of these markets, particularly on Kalshi, which recently introduced new tools to warn users about low-volume markets. While these measures may help casual users, Kendler-Kretsch argued they do not provide researchers with the data needed to assess the influence of individual traders. On Polymarket, transaction histories are more accessible, allowing for greater analysis of trading patterns and potential manipulation.
Concentration of Trading and Media Impact
The report also found that trading is highly concentrated, with 1% of Polymarket wallets accounting for 75% of congressional trading volume. A typical market had just 48 participants, and only a small fraction attracted more than 1,000 unique bettors. Industry observers, including Matt Cepulis of 3betmedia, noted that small, inexpensive price movements can be amplified on social media, potentially shaping narratives about candidate momentum far beyond the actual trading activity.
Implications for Industry Stakeholders
For operators and affiliates, these findings underscore the risks associated with thinly traded prediction markets, where odds can be influenced by small trades and then used as evidence of electoral trends. Regulators may need to consider whether current transparency measures are sufficient to protect market integrity. Suppliers and data providers should be aware that market data can be misinterpreted or manipulated, especially in low-liquidity environments.
Key takeaways
- Most US congressional prediction markets can be moved for relatively small sums, even with high overall betting volume.
- ACDC highlights transparency and integrity challenges, particularly on Kalshi.
- Trading is highly concentrated among a small group of participants.
- Small price shifts can be amplified in media, potentially distorting perceptions of electoral momentum.