SAN FRANCISCO (KRON) — In a race that’s thus far been defined largely by the tumultuous exit of arguably its most high-profile candidate, polling data on the California governor’s race has been hard to pin down. While most polls show Republican Steve Hilton as a frontrunner at this point, including a recent Nexstar Media Group poll conducted by Emerson College Polling, the race otherwise appears to remain wide open.
But prediction markets may help paint a slightly clearer picture about voter attitudes. Platforms, such as Kalshi and Polymarket, are booming ahead of this election season.
What are prediction markets?
Prediction markets initially spiked in popularity during the 2024 election cycle. Now, it’s a multi-billion dollar industry.
Prediction markets, for the uninitiated, turn real-life events into wagers for the masses. What will the weather be tomorrow? Will traffic in the Strait of Hormuz return to normal by the end of April? Will Bitcoin gain, or lose value in the next five minutes?
“The long-term vision is to financialize everything and create a tradable asset out of any difference in opinion,” Kalshi co-founder Tarek Mansour said at the Future of Global Markets conference last year.
Because betters buy and sell wagers to each other and not to the platforms themselves, the industry has operated in a loosely regulated legal gray area for decades. Companies act as bookies.
If gamblers lose confidence in a bet, they can sell it to someone else. The winning prediction receives a return on the losing side’s money, while the platform takes a small cut on those trades.
During the 2024 presidential election, polling used by KRON4 and conducted by Emerson college called the race effectively 50/50 with a margin of error of +/- 2.9% to 3%. Traders on Polymarket clocked a Trump victory at 62.3%+ the morning of election day.
What do prediction markets say about the California governor’s race?
Prior to his becoming embroiled in sexual misconduct allegations that effectively ended his campaign and led him to resign from Congress, former Democratic Rep. Eric Swalwell had a 73% of being elected governor, according to Kalshi.
Following Swalwell’s tumultuous exit from the race, gamblers on both Polymarket and Kalshi have rapidly turned to favor Democrat Tom Steyer to be the next governor. Polymarket bettors indicate there’s a 60% chance Steyer wins, whereas Kalshi leans slightly lower at 56%.
That means a $1 bet for Steyer to win on Polymarket (about $1.65 at time of this article’s release) will cash out for less money than on Kalshi (about $2). That jump in confidence in Steyer was seen on both platforms within hours of Swalwell suspending his campaign.
Polymarket also offers wagers on June 2nd’s primary election, and which parties both candidates will be from.
Kalshi’s offerings are even more extensive. It’s also offering odds on who the specific general election matchup will be, who sitting California Gov. Gavin Newsom will endorse, and if former Rep. Katie Porter will drop out, among other things.
Bettors on Polymarket have placed roughly $11.6 million on the race across all its markets. On Kalshi, they’ve placed about $800,000.
Those numbers are dwarfed in comparison to more national interests, where bettors placed $3.7 billion on the outcome of the 2024 presidential election.
How accurate are prediction markets?
Prediction markets within election settings do have admitted shortcomings. Lower volume markets suffer from the same issues as small polling samples. And because some platforms only take crypto-currencies, gamblers often stray younger than older, creating systematic blind spots in values and reasoning.
Numerous studies now show young men disproportionately gamble at higher rates than the general population. That same segment has increasingly swung to the right – potentially skewing the results.
Prediction markets also suffer from a slew of other issues, namely insider trading. Proposals to rein in the industry have caught recent wind in congress after a series of suspiciously timed trades made national headlines.
Watch the Inside California Politics California governor’s debate Wednesday at 7 p.m.
KRON4 will host six gubernatorial candidates on April 22 at 7 p.m. for a debate. To qualify, candidates needed to receive at least 5% support in a poll conducted by Nexstar on April 14-15.
The candidates set to take the stage in Wednesday’s debate are:
Republican Steve Hilton (17%)
Republican Chad Bianco (14%)
Democrat Tom Steyer (14%)
Democrat Xavier Becerra (5%)
Democrat Katie Porter (5%)
Democrat Matt Mahan (5%)
The debate will be moderated by Inside California Politics host Nikki Laurenzo and KTLA anchor Frank Buckley.
The debate will be broadcast live and streamed across all of Nexstar’s California stations, including KRON4 in San Francisco, KTLA in Los Angeles, KSWB/KUSI in San Diego, KTXL in Sacramento and KGET in Bakersfield.