2026 US midterms near $1B in volume

Over the summer, Polymarket CEO Shayne Coplan articulated on a closely-watched Netflix documentary why the 2024 US Presidential Election served as an inflection point for the prediction markets industry.

On the back of a landmark court victory, prediction markets gave Americans a legal option to trade on political contracts as Donald Trump handed Kamala Harris a resounding defeat. While NBC News and several other networks declared a dead heat in the final polls, Polymarket gave Trump odds of around 58% as booths closed on Election Night. In response, a commentator on Fox Business asserted: “Polymarket was spot on the entire time.”

“That was one of the most gratifying moments ever,” Coplan exclaimed on the program, Instadoc: The Prediction Games. “From that moment on, there was a level of credibility that prediction markets changed entirely.”

Now two years later, event contracts on the 2026 US midterms have boomed in popularity, raising philosophical questions on whether the wisdom of the crowds will eventually replace traditional polling. As of 15 October, more than $750 million in notional volume had been traded on the new platforms, according to CNN, representing a nearly eight-fold increase from the amount traded on Congressional and state races in 2024.

While Americans traded in droves on the presidential race, they only traded $92.4 million on other election contracts. But fast forward to today, there are more than 21,000 midterm offerings on Kalshi and Polymarket, according to the Anti-Corruption Data Collective. Once the midterms are complete, trading volume on the races could reach $1.6 billion, according to the nonprofit research group.

“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,” remarked author James Surowiecki on the Netflix program.

NBA restricts certain props, but prediction deal not reached

In a move aimed at restoring integrity across betting markets, the NBA and its official sportsbook partners reached a deal on Friday to ban a certain subset of prop wagers.

The NBA announced the policy before next week’s regular season opener when the New York Knicks will raise a championship banner for the first time in more than 50 years. The league is also dealing with a rash of scandals involving prop manipulation, with several former players ready to stand trial in the coming months.

Under the new rules, customers will not be able to bet on props involving certain reserve players. Generally, if a player is expected to receive less than 12 minutes in a game, a sportsbook partner will not offer props on his individual stats. In addition, customers will be prohibited from taking multiple “unders,” on the statistical performance of one player.

For instance, the sportsbooks will no longer allow customers to take the “under,” on LeBron James’ points, rebounds and assists in a single game. However, the offering is still available on Polymarket. A $10, 3-leg combo for “King James’,” debut with the Philadelphia 76ers carries a modest payout of $14.19. As of Friday night, Kalshi did not list markets on under combos for NBA games.

Although the NBA has held formal talks with the US Commodity Futures Trading Commission on establishing an integrity framework for basketball-related event contracts, the league has yet to sign a Memorandum of Understanding with the agency. Speaking with ESPN on Friday, NBA executive vice president Scott Kaufman-Ross conceded that prop restrictions could be difficult without a deal.

Selig defends proposed rules broadening swaps

Unlike the previous week, the CFTC did not surprise the markets with a compelling Friday news dump.

As the debate intensifies on whether sports event contracts fundamentally differ from legal wagers on sports, the CFTC has continually asserted its position that the agency has exclusive jurisdiction on the regulation of the derivatives. A majority of state attorney generals vehemently disagree, setting the stage for a potential battle before the Supreme Court.

On 9 Oct., the Commission issued a Notice of Proposed Rulemaking on a broader definition for financial swaps. If approved, the CFTC will classify event contracts on sports and politics as swaps. Several appellate courts have rejected the notion that the sports derivatives should preempt state laws on sports wagering.

In his first interview since the release, CFTC Chair Michael Selig reiterated that the Commission is intently focused on mitigating problematic activity on commodity markets, whether it is through insider trading, wash trading, fraud or other forms of manipulation. Earlier this week, Bloomberg reported that the CFTC and the Justice Department began a probe on $2.6 billion in suspiciously timed oil trades made near the start of the US-Iran conflict.

Separately, the Wall Street Journal reported last month that the CFTC examined approximately $5 billion in trading on Kalshi associated with bitcoin perpetual futures. Kalshi strongly denied any allegations of wash trading on its platform. Selig discussed the proposed rules on event contracts on 15 Oct. in an interview with Fox Business.

“We regulate these in our derivatives markets every day, whether it’s oil or any type of commodity,” he said. “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.”

Matt Rybaltowski

Matt is primarily responsible for long-form feature coverage on complex sports betting scandals. He also provides coverage on finance, M&A and other technological developments.