Political Betting Platform Sees Massive Bet Reversal on Israeli Election Outcome

The political betting platform Polymarket experienced a dramatic overnight shift in its market for the Israeli prime minister position, with bets totaling approximately $70 million. Just before polls opened, users gave Gadi Eisenkot a 56% chance of becoming the next prime minister, while incumbent Benyamin Netanyahu had only a 27.5% chance. However, following the release of exit polls, Netanyahu surged into the lead.

The Israeli election market on Polymarket saw over $70 million traded, making it one of the largest political bets ever recorded for a country outside the United States. On the morning before election day, $54.2 million was traded for the Israeli elections, with the market volume reaching about $70.8 million overnight. The contract for Netanyahu to be the next prime minister alone accounted for over $23.1 million of this total. By the morning after, the site reported a total market volume of $73 million.

Beyond the main race, a complex ecosystem of related bets developed. Approximately $14 million was traded on which party would be the largest in the Knesset, and about $6 million on the Likud party's seat count. Another market, speculating on when Netanyahu would leave office, accumulated a volume of around $125 million. Smaller bets, ranging from tens of thousands to hundreds of thousands of dollars, were placed on factors like voter turnout, the third-largest party, the number of mandates for Ra'am and Otzma Yehudit, and the possibility of a hung parliament.

Leading up to election day, Polymarket's predictions heavily favored Eisenkot, with 56% of the market share, followed by Netanyahu at 27.5%, Naftali Bennett at 10.5%, and Avigdor Lieberman at 1.5%. A competitor platform, Kalshi, showed a similar trend. Eisenkot's market share had risen significantly in the days prior, fueling expectations of a political upset. Bets on the largest party also went against the Likud, with Eisenkot's "Yashar!" list given a 73.5% chance of being the largest, and the Likud only 26%. The preferred range for the Likud's seat count was 20-24 mandates, with a 42% probability, and a 31% chance of falling below 20 seats.

The market's predictions did not fully align with the final results. While the market incorrectly predicted the largest party and the Likud's seat count exceeded expectations, it did correctly anticipate a close race and the likelihood of a hung parliament. The dramatic reversal occurred immediately after exit polls were released. Post-poll data showed Netanyahu leading with a 48% chance of continuing as prime minister, Eisenkot dropping to 33.5%, Bennett to 7%, and Lieberman to 2.7%. Currently, the Likud is priced at a 99% chance of being the largest party, with a 90% probability of securing 25-29 seats. The market also reflects expectations of a lengthy coalition negotiation period, with a 60% chance of a hung parliament. A separate market on Netanyahu's tenure until June 2027 shows a 41% chance of him leaving office by then. Polymarket's prices are determined by the buying and selling of contracts, reflecting the traders' real-time assessments, which in this case, flipped dramatically overnight.