Polymarket, the crypto-based prediction market whose rise this year was vindicated by the presidential election results, is now signaling that the Republicans will almost certainly retain control of the House of Representatives.
As of Wednesday afternoon in New York, “Democratic” shares for Polymarket’s “House control after 2024 election?” contract were trading at 1 cent, indicating traders see only a 1% chance of the party taking back the chamber. Each share pays out $1 (in USDC, a stablecoin, or cryptocurrency that usually trades one-for-one with dollars) if the prediction comes true, and zilch if not.
The GOP’s odds of winning the House, accordingly, were at 99%.
While news organizations predicted that Democrats would hold the House in the early hours of the election on Nov. 5, by Wednesday afternoon they began following Polymarket in saying those chances were “fading.”
Just 24 hours earlier, the market was giving the Democrats a slightly better than even chance of prevailing in the lower house of Congress.
According to the Associated Press, control of the House was still undecided as of 2 p.m. ET. But the Republicans have won at least 52 Senate seats, ensuring them a majority in the upper chamber.
If the current odds are correct, then the Republicans, led by president-elect Donald Trump, will have hit the trifecta, controlling the White House and both houses of Congress.
That, in turn, would ease the path for comprehensive crypto legislation in the next Congress, something the industry has been pushing for, complaining that existing laws do not clearly address how digital assets should be regulated.
By contrast, Gary Gensler, the lame-duck chairman of the Securities and Exchange Commission under outgoing President Joseph Biden, has insisted that existing rules are sufficient to supervise the industry.
To be sure, Polymarlet’s House contract has relatively small volume ($2 million) compared to the now-resolved presidential market, which saw billions in trading.
In prediction markets, traders bet on the verifiable outcomes of real-world events within defined time frames. In recent weeks, the higher odds Polymarket gave Trump of winning the presidency compared to polls led to speculation in the mainstream media that someone was manipulating the market to overstate his chances.
Proponents have long argued that these markets can be a superior forecasting method compared to polls or punditry because the participants are putting money on the line and therefore are strongly incentivized to do thorough research and bet on what they believe will happen, not what others want to hear.
Trump’s resounding victory, despite polls that showed a toss-up, supports that case.
“Markets are better than models. Almost axiomatically, because any model that has [a] useful signal is already incorporated into market prices,” said Flip Pidot, CEO and co-founder of American Civics Exchange, an over-the-counter dealer in political contracts.
“Markets aren’t perfect, but they’re the best mechanism we’ve got, for discounting not only future cash flows but future uncertainties,” Pidot said. “So markets generally benefit from models to the extent they can incorporate them in their pricing. But if you’re looking for the best fair odds, look at market prices, not legacy forecasters.”