Prediction Markets Misjudge Brazil’s Presidential Election; Kalshi Put Lula’s Chances of Winning at 21%

[Financial News]  

It emerged that prediction markets had badly misjudged the results of Brazil’s presidential election on the 25th (local time). In the runoff, Luiz Inácio Lula da Silva upset expectations, defeating Senator Flávio Bolsonaro to win a fourth term as president. Lula received 51.8% of the vote, while Bolsonaro received 48.2%.
According to CNBC on the 26th, prediction markets badly misjudged the race in this extremely close election. On Kalshi, the probability of President Lula winning stood at just 21% even on the night of the 25th.
On Kalshi, the probability of Bolsonaro winning gradually rose after he won the first-round vote on the 4th. It climbed above 80%.
Kalshi’s election predictions have been controversial. Last August, Kalshi gave Francesca Hong, a democratic socialist, a 95% chance of winning the Democratic primary to select the party’s candidate for Wisconsin governor, but she lost to David Crowley by less than one percentage point.
In response, Kalshi co-founder and CEO Tarek Mansour said, “A 5% probability doesn’t mean there’s no chance at all that it will happen. It means it happens one time in 20. If a candidate with a 5% chance could never win, prediction markets would go bankrupt.”

[email protected] Song Kyung-jae Reporter