California Prediction Markets are Impacting Elections

Many are wondering the extent to which California prediction markets can actually gain and sustain a foothold in The Golden State. And now, they have their answer.

What plenty of people considered a fly-by-night fad has officially gone mainstream. In the continued absence of California sports betting legalization, prediction markets are seeing a surge of business from those in The Golden State. The meteoric increase in volume has been especially noticeable since FanDuel and DraftKings launched their own California prediction markets toward the latter end of 2025.

Yet, it is not just the sheer amount of interest from customers in the region illustrating the industry’s mounting popularity. It is also the way in which lines are being cited to convey outlooks for major events.

Indeed, this includes the usual use of California prediction market odds. Sports analysts will use the Los Angeles Dodgers’ odds to win the World Series next fall as a way of determining their overall standing across Major League Baseball.

The real kicker, though? California prediction markets are now being used as a source to project the outcome of local elections.

California Prediction Markets have Graduated to a New Level of Popularity

It bears repeating that we are talking about more local elections rather than the 2028 Presidential election. While California prediction markets for the latter being cited are still notable, the hyper-localization of their use more accurately reflects just how widely known and accepted they have become. As Christine Mui writes for Politico:

“Eric Swalwell has made a habit of posting and sending out screenshots of his betting odds in the race for California governor. The Bay Area Democrat has every reason to keep at it, holding frontrunner status on the most popular prediction markets, Kalshi and Polymarket, for months. But he’s hardly alone in tracking performance on the platforms, where millions of dollars are flowing, and politicians are starting to promote wagers — alongside more traditional metrics like polling and fundraising — to demonstrate momentum in the midterms.

“‘This cycle, it’s basically all I hear about from all my friends who are running for office around the country,’ said former Rep. Sean Patrick Maloney, the New York Democrat who was Swalwell’s colleague in the House and now leads a coalition representing Kalshi and competitors in the prediction markets space. ‘It’s become a big part of the way candidates describe where they sit, how they’re doing.’”

It is difficult to overstate the significance of this development. Electoral candidates used to rely on more official polling numbers to promote their advantages. Incorporating California prediction markets into the equation is, in many ways, the ultimate form of validation for them.

The Reliance on Prediction Markets Goes Beyond Individual Agendas

More critically still, it is not just candidates drawing attention to favorable odds. Respected consultants and data experts are using California prediction markets, too.

Paul Mitchell, the well-known Democratic consultant, is just one example of this trend. He included “Polymarket data when he created a simulator to game scenarios for California’s top-two primary,” according to Politico.

This is pretty brain-bending when you consider it. Not too long ago, California prediction markets were barely spoken about, let alone used as a reliable source to forecast the outcome of local and national elections.

Granted, part of this was by design. California prediction markets are only thriving as much as they are thanks to Donald Trump’s presidential administration. Under President Joe Biden, there were more guardrails with the Commodity Futures Trading Commission. These restrictions limited the general public’s access to prediction markets. More specifically, they put constraints on what prediction markets could even disseminate to the public.

Even so, if you rewind to the 2024 elections, prediction-market operators like Kalshi and Polymarket still existed. They also had lines on which candidates would win certain elections. But did you ever hear those odds being cited? Never mind the local California elections. They were hardly identified as reliable predictive models for the presidential race.

All of which is to say, it is not just California prediction markets that have come a long way in a short amount of time. It is the entire prediction-market sector that’s rising to the level of mainstream consciousness.

Time Will Tell Whether California Prediction Markets are Dependable Forecasting Agents

Of course, this raises the issue of whether electoral candidates, consultants, data experts, polling entities, etcetera is actually a good idea. Track records are important when it comes to leaning on figures or odds-related models. California prediction markets do not have an extensive enough sample size to fall under the irrefutable bucket.

This lends itself to concerns for obvious reasons. The most important of them is rooted in how prediction markets work.

Unlike those who operate online sports betting in the United States, prediction-market lines are not proprietary. As a commodities subset, they are, essentially, a snapshot of public sentiment. They are not weighting in other information, most notably polling information from third-party sources.

Public sentiment is a turbulent catalyst when it comes to making forecasts. While sports betting lines can be influenced by the volume of action, they are shaped using other factors. In theory, this means California prediction market lines for the governor’s race can more starkly swing depending on how bettors/traders/investors feel in a particular moment.

To some extent, this is kind of the point. Election results, after all, are the byproduct of public sentiment. At the same time, pollsters cannot be sure who’s actually using them. California prediction market customers could skew heavily towards a single political party or candidates. That, in turn, would provide a lopsided—and therefore inaccurate—view of the “projected” results.

This alone makes the upcoming election season one to watch. The winners of each race will always matter more than anything. This time, though, California prediction markets will show whether they can be trusted to accurately forecast those victors.

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