Prediction markets work well to forecast elections as polling has become less accurate over time, according to Kalshi CEO Tarek Mansour.
"Prediction markets work better, they really do," Mansour said in an interview with The Block.
Prediction markets like Kalshi deliver real-time information unlike polls that can take up to two weeks, Mansour said. Election polls have had some miscalculations over the years, specifically in the 2016 presidential elections when national polls said that Hillary Clinton would win and later in 2020 in misjudging Donald Trump's support. For this year's election, pollsters are taking on different strategies to get more accurate results, according to reporting from CNBC.
Mansour attributed the inaccuracy in polling to bias and polarization. As for prediction markets, Mansour said "it's much harder to lie when you have some money on the line."
"You're actually much more truthful, and that's why these markets work so well," Mansour said.
Kalshi notched a major win this week after an appeals court cleared the predictions market to list election betting. This comes about a year after the U.S. Commodity Futures Trading Commission said that Kalshi could not offer election contracts and said they were "contrary to the public interest" and involved gaming. Kalshi then sued.
Last month, Judge Jia M. Cobb for the U.S. District Court for the District of Columbia ruled that the CFTC exceeded its authority when it pushed back against prediction market Kalshi's move to list those contracts. The agency then quickly appealed the ruling, but which was ultimately quashed.
Kalshi currently allows people to bet on which political party they believe will secure the U.S. House or Senate. Mansour said Kalshi will launch a market where people can place bets on who will win the U.S. presidential election on Thursday or Friday.
Polymarket, a rival blockchain-based betting market, has an open market for the upcoming presidential election with over $1 billion in cumulative wagers.
The CFTC has voiced concerns about election integrity when it comes to betting on the outcome of different political races. During a hearing last month, Rob Schwartz, general counsel at the CFTC said betting on elections would undermine election integrity. The agency also has rulemaking underway, though not yet adopted, that proposes placing a ban on political events bets.
Mansour calls the CFTC's concerns "baseless." He said it was "mechanically impossible" to alter election perception. For example, if someone spends millions of dollars to misinform the public about a candidate, it may move the price one to two percentages, but arbitrageurs will bring it back within minutes, Mansour said.
"These markets actually bring more truths to the system," Mansour said. "They do better than polls."
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