Tradingthemidtermsonpredictionmarkets

Figures to 18 October 2026 unless stated.

Election results change expectations for taxes, regulation and which companies benefit from policy, and prices adjust within hours. On the night of the 2024 presidential election, as Polymarket's Trump-win price rose from 62% to 99.8%, bitcoin rose 6.4%, the euro fell 1.9% against the dollar and gold fell 3.1%, each more than on any night in the previous month. Single stocks repriced when US markets opened the next day, with the largest moves at least twice any daily move in the previous month.

The winners were the sectors most exposed to the incoming administration's agenda: crypto on expectations of lighter regulation, and private prisons on immigration enforcement. Clean energy, the most subsidy-dependent, fell. Within electric vehicles, Tesla rose on its chief executive's ties to the administration while Lucid and Rivian fell, so markets priced companies by their policy exposure rather than by sector.

Midterms move assets less than presidential elections, as tariffs, foreign policy and most regulation stay with the executive. Their impact runs through Congress: whether new tax cuts or spending can pass, the risk of government shutdowns and debt-ceiling standoffs, how strictly banks, crypto and energy are regulated, and who the Senate confirms to the Fed, SEC, CFTC and OCC. That makes the Senate the more market-relevant chamber. J.P. Morgan notes that since 1950 the S&P 500 has risen in the 12 months after every midterm, by about 15% on average, as election uncertainty fades. Its strategists favour a split Congress for its "limited downside policy risk" and expect divided government to limit new fiscal stimulus, which can cap Treasury yields. Among the stocks they expect to benefit are Meta, Oracle and Gilead if Congress is split, and Bloom Energy, Lockheed Martin and Bank of America in the less likely case that Republicans keep both chambers.

The balance-of-power contract, which pays out on the combination of House and Senate control, maps most directly onto these policy outcomes. As of 18 October, Polymarket and Kalshi, which price every major contract within 3 percentage points of each other, put a Democratic sweep at 61-63%, a Democratic House with a Republican Senate at 28-29% and a Republican hold of both chambers at 8-11%. That is about 10 percentage points more on the split outcome than Silver Bulletin (19%) and Poliwave (17%), but close to ElectIt (25%), an academic model by Harvard's Gary King and colleagues.

The president's party has lost House seats in 20 of the 22 midterms since 1938, and markets price a Democratic House at 90-91%, in line with the models. Senate outcomes are less predictable, as only a third of seats are contested: markets put a Democratic Senate at 63-65%, in the middle of a 56-75% range across four models. Against Silver Bulletin, the most bullish, the gap is concentrated in Ohio, Maine and Texas, where markets price the Democratic candidates at 59-66% vs. 71-74% in the model, consistent with how close recent polls are.

Kalshi has traded $353M of notional ($147M cash) on midterm markets this cycle, vs. $160M ($77M) on Polymarket, and accounts for 71% of recent volume and 84% of open interest. Combined notional reached $59M in the seven days to 18 October, 2.3x the same period four weeks earlier.

Midterm open interest stood at $250M on 18 October: $210M on Kalshi and $40M on Polymarket. Midterms draw less capital than presidential races: Polymarket's midterm book is about 30% of its 2024 election book at the same point, and 2028 presidential markets already hold more ($264M on Kalshi, $56M on Polymarket). US election markets account for 36% of open interest on the two venues (16% for the midterms alone), vs. 66% in October 2024.

On Polymarket, 24,930 wallets hold midterm positions (median $14), the top 100 hold 56% of value, and retail wallets account for about 20% of both aggressive trading and open positions. On the Senate, larger wallets have been sellers and smaller ones buyers: between 1 and 18 October, about 90 mid-sized directional traders, large quoters and bots sold a net 330k Democratic Senate contracts, while about 1,800 smaller wallets bought 280k. Senate control is 6-7x shallower than House control, as Senate trading is spread across individual state races.

In 2024, bitcoin, currencies and gold repriced overnight as the result became clear, but single stocks had to wait for the US open, where Coinbase and Tesla gapped up and solar stocks gapped down. This time equity exposure trades through election night as well. Hyperliquid now lists more than 160 perpetual markets on its builder-deployed HIP-3 exchanges, including the S&P 500 ($382M open interest), two of the 2024 movers, Tesla ($78M) and Coinbase ($15M), and three of J.P. Morgan's names: Meta ($86M), Oracle ($19M) and Bloom Energy ($4.1M). Prediction-market odds and these perpetuals will move in the same hours on 3 November, so positions can be adjusted as results come in. The contract to watch is a Democratic House with a Republican Senate, priced at 28-29%: it is where markets differ most from Silver Bulletin and Poliwave, and the outcome J.P. Morgan sees as most favourable for equities.