Prediction markets flop on recent elections - Semafor

Prediction markets blew three big elections this week, a bad look for platforms pitching themselves to investors as hedges against global risk. Kalshi and Polymarket both gave Brazilian conservative Flávio Bolsonaro a 4-in-5 chance of winning; he lost to the progressive incumbent, costing anyone who traded Brazil’s currency and stocks.

The markets also overrated Netanyahu’s challenger in Israel, where the race is still too close to call — and where a series of suspicious bets elicited an investigation by Polymarket. In Serbia (emerging-market investors need good information, too!), Kalshi gave the heavily favored incumbent strongman 75% odds as late as election day. He lost.

Kalshi has touted the accuracy of its markets to win over institutional investors. A hedge that doesn’t work is doubly bad: useless and expensive.