Kalshi Election: How Prediction Markets Cover Politics

Kalshi’s prediction markets on political events, including elections, were at the center of a landmark 2024 court battle against the CFTC. Kalshi won, establishing that prediction markets on political and economic events are legal in the United States. As we detail in our full review of the Prediction Markets presentation, Luke Lango cites this legal victory as a key structural force driving prediction market growth.

The CFTC Court Battle

The Commodity Futures Trading Commission had sought to block Kalshi from offering prediction markets on political events, arguing that they constituted illegal gambling. Kalshi fought the case and won. The court ruled that prediction markets on political and economic events are legal under existing commodities law.

This was the regulatory milestone that removed the primary uncertainty keeping the prediction market industry from scaling. Before the ruling, platforms operated in a gray area. After it, they had a clear legal framework. The ruling opened the door for mainstream adoption, including Robinhood’s entry into prediction markets through its partnership with Susquehanna. For more on Kalshi, see our article on what is the Kalshi app.

Election Markets and Forecasting

Prediction markets on elections have become a real-time forecasting tool. When CNN or Fox references “the markets” on election night, they are increasingly citing prediction market data rather than traditional polls. The prices of shares in prediction markets reflect the collective wisdom of participants who have real money at stake, which often produces more accurate forecasts than opinion polls.

This forecasting utility is one of the structural forces Lango identifies. Broadcasters, analysts, and political campaigns use prediction market odds as a data source. The more attention prediction markets receive as forecasting tools, the more users they attract, creating a positive feedback loop. For more on the structural forces, see our article on prediction market investing.

The Robinhood Connection

Robinhood (HOOD) has partnered with Susquehanna to offer prediction markets, including political event contracts, to its 27 million users. The key competitive detail is pricing: Robinhood charges a flat $0.01 per contract, compared to Kalshi’s variable fees. For users interested in election prediction markets, Robinhood offers a cheaper, more convenient alternative to dedicated prediction market platforms.

If election prediction markets attract significant volume, Robinhood’s 27-million-user base and flat-fee pricing give it a structural advantage. The 2024 election cycle demonstrated that prediction markets can capture mainstream attention. Future election cycles could drive even more volume as awareness grows. For more on Robinhood’s prediction market play, see our article on Robinhood prediction markets.

The Coinbase Connection

Coinbase (COIN) owns the infrastructure that Polymarket, the other major prediction market platform, depends on. Polymarket runs on the Polygon network and uses USDC for settlement. Coinbase is the primary U.S. exchange for USDC. Every Polymarket trade, including election prediction trades, settles through infrastructure that Coinbase supports.

Additionally, Coinbase is rolling out prediction markets to its own user base, which means it benefits from prediction market growth regardless of whether users choose Kalshi, Polymarket, or Coinbase’s own platform. For more, see our article on Polymarket stocks.

The Market Size

Lango cites estimates suggesting the prediction market could grow from $64 billion today to $1 trillion by 2030. Trading volume is up 400 percent in recent quarters, according to Pew Research data. Election prediction markets are a significant component of this growth, as political events attract both casual and serious participants.

The institutional interest adds another layer. Goldman Sachs has a team analyzing prediction markets and is reportedly building a prediction market trading desk. Institutional participation in election prediction markets could drive significant volume. For more on the institutional angle, see our article on the Nasdaq private market.

Investing vs. Betting on Elections

Lango’s core message is that you do not need to bet on election outcomes to profit from election prediction markets. You invest in the infrastructure companies. If election prediction markets grow, Robinhood and Coinbase benefit regardless of who wins any specific election. Your investment thesis depends on the growth of the category, not on the outcome of any political event.

This is the picks-and-shovels approach. You are not predicting the election. You are investing in the companies that make election prediction markets possible. For more on this approach, see our article on prediction market stocks. For more on Kalshi specifically, see our article on Kalshi stock.

This is not financial advice. Always do your own research before investing.