By Lisa Pauline Mattackal

(Reuters) – Donald Trump is a clear favorite to beat Kamala Harris, according to prediction markets, the latest trend among crypto speculators.

As the U.S. election approaches, billions of crypto dollars are being wagered on the two candidates on platforms like Polymarket and Kalshi. On Monday, these sites indicated Trump had a 57%-43% lead on Polymarket and a 51%-49% lead on Kalshi, contrasting with tight opinion polls.

Polymarket, the busiest betting platform, has seen about $3.1 billion in trading volume focused on the presidential election outcome. Kalshi, regulated by the U.S. CFTC, reported nearly $197 million on its election contracts, with its second-largest contract on the electoral college margin attracting $33.8 million.

Opinions are divided on whether these prediction markets are reliable indicators of election outcomes or influenced by large, crypto-dominated bets. Elon Musk believes these markets outperform polls since actual money is involved, despite skepticism from others.

Michael Cahill, CEO of Douro Labs, noted that typical voters don't engage in prediction markets, leading to a skewed representation. The prices on these sites reflect the assumed probabilities of outcomes: a Trump win costs about $0.58 and Harris about $0.42 on Polymarket, with winning bets receiving $1 per contract.

A Kalshi spokesperson assured that all traders are vetted, with caps on individual and institutional trades.

Crypto exchange dYdX also allows more complex leveraged betting linked to Polymarket's odds for either candidate.

'BIG TEST' AFTER U.S. ELECTION

Adam McCarthy, a research analyst at Kaiko, mentioned that the total figure of Polymarket bets includes inactive wagers on candidates like Nikki Haley and RFK Jr., leading to misinterpretations of active market dynamics. Actual trading volume for Trump and Harris winning constitutes about $1.97 billion of Polymarket's $3.1 billion total.

Interestingly, a French national has reportedly placed significant bets on Trump through Polymarket, as U.S. citizens are barred from trading on this platform due to regulations.

Overall, the betting activity related to the U.S. election has surpassed previous trends on these platforms. For instance, Polymarket’s October trading volume reached an unprecedented $1.1 billion, significantly higher than previous months.

McCarthy expressed uncertainty about the future of these sites after November 5, stating, "There's a big test on how they manage to stay relevant after the election."