"Our markets are super dynamic as new information comes out, whether that be a poll, whether that be an event in the real world." Each has a long track record, and each has stumbled.
Polls ask a sample of voters about their preferences at a given moment. By contrast, prediction markets let traders buy contracts that pay if an event happens, so a $1 dollar contract trading at 60 cents implies a 60% chance.
Polls survey a representative sample of voters and ask about their personal preferences or intentions at a specific point in time. On the other hand, prediction markets work like financial exchanges where participants buy and sell contracts based on the likely outcome of an event. Contract prices fluctuate based on demand, reflecting the collective probability estimated by traders.
In short, polls measure opinion, while markets put money on outcome probability.
The best-known long-term test comes from the University of Iowa. Researchers compared Iowa Electronic Markets Forecasts with 964 national polls from the 1988 through 2004 presidential elections and found the market was closer to the final result 74% of the time. Its edge was largest more than 100 days before Election Day.
The 2024 presidential race gave markets a high-profile win. On election morning, Kalshi priced a Donald Trump victory at 57 cents and Polymarket at 62 cents, while forecasts built on polling averages showed a near tie.
The record is not one-sided, however. A Vanderbilt University study of political markets during the final five weeks of the 2024 race found that similar contracts on different platforms were often priced differently and moved independently, suggesting traders sometimes reacted to one another rather than to news.