Polymarket, a crypto-based prediction market platform that has garnered considerable attention this year, has projected that the Republicans will retain control of the House of Representatives following the 2024 elections. As of Wednesday afternoon, shares for Polymarket’s “House control after 2024 election?” contract for the Democrats were trading at a mere 1 cent. This suggests that traders believe there is only a 1% chance that the Democrats will regain control of the chamber. Each share promises a payout of $1, payable in USDC, a stablecoin or cryptocurrency that typically trades at parity with the dollar, should the prediction come true. If not, the payout is nil.
Consequently, the odds for the GOP retaining control of the House are a whopping 99%. Earlier predictions from news organizations pointed towards the Democrats holding the House, but by Wednesday afternoon, these predictions began aligning with Polymarket’s, indicating dwindling chances for the Democrats.
A mere day ago, the market had predicted slightly more than even odds for the Democrats winning the lower house of Congress. However, the Associated Press has reported that as of 2 p.m. ET, the control of the House remains undecided. The Republicans, on the other hand, have claimed at least 52 Senate seats, ensuring a majority in the upper chamber.
If the current odds hold true, the Republicans, under the leadership of President-elect Donald Trump, will have achieved a trifecta, securing control of the White House and both houses of Congress. This could potentially pave the way for comprehensive crypto legislation in the next Congress, which is something the industry has been advocating for, arguing that the current laws do not adequately address the regulation of digital assets.
The outgoing chairman of the Securities and Exchange Commission under President Joseph Biden, Gary Gensler, however, insists that the existing rules are sufficient for overseeing the industry.
It is worth noting that the trading volume of Polymarket’s House contract is relatively small at $2 million, compared to the presidential market, which saw billions in trading.
Prediction markets allow traders to bet on the outcomes of real-world events within specified time frames. Despite the accusations of market manipulation in recent weeks, proponents argue that these markets offer a more accurate forecasting method than polls or punditry, as traders stake their money based on what they believe will happen, rather than what others want to hear.
The decisive victory of Trump, despite polls indicating a close call, supports this argument. Flip Pidot, the CEO and co-founder of American Civics Exchange, a dealer in political contracts, has said that markets are more reliable than models.
“Markets aren’t perfect, but they’re the best mechanism we’ve got, for discounting not only future cash flows but future uncertainties. So, if you’re looking for the best fair odds, look at market prices, not legacy forecasters,” Pidot said.
