Prediction Markets Called the Blue Wave. Most Canadians Couldn't Place a Bet.

The polls said Democrats would win the midterms. The traders put money on it. Kalshi says more than US$2.5 billion changed hands on its 2026 midterm markets, nearly double the US$1.3 billion it saw in 2024, and that the candidates its traders favored won 98% of the races it tracked, according to the company's own recap. Its House control market hit 99% at 8:10 p.m. Eastern on election night, and the Senate market crossed 99% at 9:00 p.m.

That is a company grading its own homework, so treat it as a sales pitch with numbers attached. Still, election night was the biggest test yet for a product that barely existed legally in the US three years ago. In most of Canada's largest provinces, you can't trade on it at all.

How Much Money Moved on Midterm Night?

Estimates vary because nobody counts the same way. Semafor put down-ballot election trading across the platforms at US$1.8 billion, "nearly fivefold" the 2024 cycle, in its election night analysis. Before polls even opened, Kalshi had already logged US$1.4 billion on the midterms, with US$251 million on control of Congress alone, Fortune reported.

Kalshi dominated. About a week before the vote, Polymarket had roughly US$340 million in midterm volume against Kalshi's US$1.1 billion, according to Trefis. Polymarket still produced the night's best story. One trader put US$609,644 on Republicans losing every Senate swing state, bought at 36% odds, and was sitting on about US$917,000 in mostly unrealized profit while Alaska was still being counted, Decrypt reported.

Did Prediction Markets Actually Beat the Polls?

On the big calls, not really. On election morning, prediction markets gave Democrats a 77.3% chance of taking the Senate, while poll-based models had them at 80.2%, Yahoo Finance found. For the House, it was 94% for the markets and 96.2% for the polling models. The polls were the more confident side.

The markets did better in some individual races. Kalshi points to Texas's 15th District, where traders favored Democrat Bobby Pulido in March while expert ratings still called it "Likely R." He won by nearly 25 points. In North Carolina, traders forecast a 9.5% Roy Cooper margin in mid-October. He won by nearly 20.

And they missed some big ones. Semafor notes the markets did not see Texas Governor Greg Abbott's loss coming, or the Democratic Senate wins in Iowa and South Carolina. Even Kalshi's founders have a line ready for the misses. "5% is not 0%," they told Fortune.

Why Are Watchdogs Worried About Election Betting?

Because thin markets are easy to push around. The Anti-Corruption Data Collective found that 10 wallets controlled 17% of Polymarket's congressional volume, that 76% of its markets held under US$1,000, and that 55.1% of them could be moved five cents for under a dollar, RG.org reported. "This is legal, and that's part of the problem," said the group's Michael Hornsby.

That matters when odds become headlines. If a cheap trade can nudge a candidate's chances on a screen that cable news is showing, the market becomes a messaging tool. Senators Elizabeth Warren and John Curtis, a Democrat and a Republican, wrote that they are "particularly troubled by election-related event contracts," per Yahoo Finance.

The states are going further. In September, the Sixth Circuit Court of Appeals ruled that Ohio and Tennessee can apply gambling law to Kalshi's sports contracts, CNBC reported, which splits the federal appeals courts and points the fight toward the Supreme Court.

On October 28, Utah filed 14 criminal charges against Kalshi's parent company and its two co-founders, and the Justice Department and CFTC sued to block the state's civil case days later, according to law firm Brownstein Hyatt. Arkansas sued the day after the election. "It doesn't take a genius to understand that wagering money on whether the Razorbacks win or lose is gambling," Attorney General Tim Griffin said, per CoinDesk.

What Does a Democratic Congress Mean for Prediction Markets?

More scrutiny, and possibly a real bill. Nearly 30 prediction market bills have been filed since 2025, mostly by Democrats, and none have passed, CNBC reported. The political wiring gives Democrats plenty to investigate. Donald Trump Jr. advises both Kalshi and Polymarket, and his firm 1789 Capital invested in Polymarket.

Sports remain the business. Kalshi's election contracts are the marketing, but most of its trading is on games, and that is where state attorneys general are pressing hardest. A Democratic Congress with subpoena power and a Supreme Court case on the horizon make 2027 the year this industry finds out what it legally is.

Can Canadians Trade on Prediction Markets?

Mostly no. Polymarket lists Ontario, Quebec, British Columbia and Alberta as "close-only," meaning users there "may close existing positions but cannot open new ones," according to its geoblocking documentation.

Canadian regulators drew their line in August. In a joint notice with the Canadian Investment Regulatory Organization, the Canadian Securities Administrators said sports and entertainment contracts "should not be regulated within securities and derivatives legislation," and that two registered dealers may offer only contracts tied to economic, environmental or financial indicators, per the Ontario Securities Commission. The CSA chair who said it is Stan Magidson, who also runs the Alberta Securities Commission. Election contracts are still under assessment.

So the most-watched market of the night was one most Canadians could only refresh, not trade. Given how easily thin election markets can be moved, that may not be the worst outcome. If Canada ever opens the door, the US is running the experiment first, complete with felony charges, a circuit split and a new Congress that wants answers.