Prediction markets diverge from traditional polls in NC races as Election Day nears

With Election Day less than a week away, prediction markets are signaling strong chances for some North Carolina congressional candidates, even as some traditional polling remains uncertain. 

In North Carolina’s 1st Congressional District, polls have consistently shown Democratic U.S. Rep. Don Davis and Republican challenger Laurie Buckhout within the margin of error. 

The Cook Political Report rates the race a toss-up. But prediction markets give Davis a roughly 80% chance of winning reelection, making him a four-to-one favorite.

Do the markets know better than the pollsters? We won’t know until the election is over. 

Prediction markets allow traders to buy options on election outcomes for a profit. Traditional betting on elections is illegal throughout the U.S. But market owners say the trades are investments, not bets, and are therefore not subject to gambling laws.

Those markets are also less representative and less scientific than polls. They don’t require traders to live in the state or to be registered voters, and there’s no way to sample them to ensure a cross-section of likely voters from all parties.

But research suggests prediction markets may influence how voters perceive candidates’ chances of winning. 

A study published this month by the Brennan Center for Justice found that prediction market odds can influence voters’ perceptions of which candidate was likely to win, even when those odds conflicted with polling. 

Researchers surveyed about 2,000 registered voters using hypothetical races. The respondents were 10 to 20 percentage points more likely to view a candidate as the likely winner when prediction markets gave that candidate better odds. 

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Only 19% said election prediction markets were accurate compared with 37% who said the same about traditional polls, according to the study. 

In the 1st Congressional District, about $27,000 has traded in the market for the race, with nearly 96% of the total coming this month. 

AJ Francia, head of product at Prediction.com, combines data from platforms like Kalshi and Polymarket, which let users place bets on elections. 

Francia said the markets initially only gave Davis around a 25% chance of winning reelection after redistricting made his district more challenging for a Democrat. But the odds have now climbed to above 80%.

“Inflation, gas prices and geopolitics concerning the Iran war have led to a general shift toward Democrats winning these midterm elections,” he said. 

That shift has also occurred in the 11th Congressional District. Democratic candidate Jamie Ager’s implied chance of winning rose above 85% earlier this month, about two weeks before Cook changed its rating of the formerly deep-red district to “Lean D.”

About $42,000 has been traded in the 11th District market, with 79% coming in this month. 

The U.S. Senate race between Democrat Roy Cooper and Republican Michael Whatley has drawn significantly more trading activity. 

About $4.9 million has been traded on Kalshi and Polymarket combined, with prediction markets giving Cooper a 96% chance of winning and Whatley 3%.

Francia said the markets can react quickly to new information, including economic developments and candidates’ public performances. But he said the track record of today’s large prediction markets is limited. 

Nonetheless, North Carolina Democrats say they’re seeing similar signs of momentum in the state and believe it could put more congressional seats in play. 

At a press conference Wednesday, North Carolina Democratic Party Chair Anderson Clayton said early voting numbers had put as many as 10 congressional districts in play, including those drawn to be safe GOP seats by Republican lawmakers. 

Democrat Richard Ojeda, who’s challenging Rep. Richard Hudson in the 9th Congressional District, said he believed Democrats are gaining support from unaffiliated voters and some Republicans. 

“We’re on the verge of flipping the seats,” he said.