Prediction markets are becoming an increasingly important part of the financial landscape as investors evaluate their ability to forecast political outcomes, price risk and generate valuable market data. On FINTECH.TV’s Market Movers, Remy Blaire speaks with Adam Morgan McCarthy, Researcher at LO:TECH, about how platforms such as Kalshi and Polymarket performed during the 2026 U.S. midterm elections, the growing institutional interest in event trading and why tokenization and round the clock financial markets could transform trading in 2027.
McCarthy examines how the midterm elections provided a major test for prediction markets, with billions of dollars flowing through event contracts tied to political outcomes. He explains why the election represented an important opportunity for platforms such as Kalshi and Polymarket to demonstrate their ability to process significant trading activity and reflect changing expectations. While prediction markets appeared to anticipate the Democratic wave ahead of some traditional forecasts, regional inaccuracies highlight the limitations of treating market prices as guaranteed predictions.
The conversation explores the different behaviors of retail and institutional participants in political prediction markets. With smaller traders placing relatively modest bets and larger transactions showing stronger support for Democratic victories, the discussion examines how trading activity can reveal differences in market sentiment. McCarthy explains why analyzing these patterns could become increasingly useful for investment managers seeking additional signals about political and economic developments.