$70m bet on Eisenkot wiped out overnight

In the days leading up to the vote, the prediction markets painted a clear picture: Eisenkot would be the next prime minister, and Likud was headed for a historic collapse. Traders on Polymarket gave Eisenkot a 56% chance of forming the next government, compared to Netanyahu's 27.5%. On the rival platform Kalshi, the numbers were nearly identical: 55% for Eisenkot, 26% for Netanyahu. Naftali Bennett was a distant third at 10.5%, with Avigdor Lieberman at 1.5%.

The market was even more confident that Yisrael Beiteinu would finish as the largest party in the Knesset, assigning it a 73.5% probability. Likud, by contrast, was given just 26%.

Traders also bet heavily on a Likud meltdown. Forty-two percent of the money wagered that Likud would finish with between 20 and 24 seats, while another 31% bet the party would fall below 20 seats entirely.

Exit polls flipped the market 180 degrees

The reversal came all at once, as soon as television exit polls were released. The predictions of a Likud collapse evaporated. Likud is projected to finish with around 27 seats, and Netanyahu has retaken the lead in the betting markets.

As of this morning, Netanyahu holds a 59% probability of receiving the first mandate from the president to form a government, compared to 41% for Eisenkot. His odds of remaining prime minister stand at 48%, while Eisenkot has fallen to 33.5%. Bennett has weakened to 7%, and Lieberman to 2.7%.

The market has also corrected its error on the largest party, at considerable cost to those who bet against Likud. This morning, Likud is priced at a 99% probability to be the largest party, with over 90% odds of finishing in the 25-to-29-seat range.

The Israeli election became one of the most active betting markets on Polymarket. On the morning before election day, total trading volume stood at $54.2 million. By the following morning, it had crossed $73 million. The contract on Netanyahu alone as the next prime minister drew $23.1 million in wagers.

Around the central questions, an entire ecosystem of side bets developed. A separate market on the date Netanyahu's term will end has attracted $125 million, with 41% odds given to his leaving office by the end of June 2027. Fourteen million dollars were traded on which party would be largest, and $6 million on Likud's exact seat count.

While the market failed entirely to identify the largest party or assess Likud's strength, it did call two major factors correctly. First, turnout: Polymarket traders had assigned high probability to a turnout of 74% or higher. In the event, turnout reached 77.7%, the highest since the 1999 election.

Second, the market accurately identified the coming deadlock. Even before the exit polls, traders estimated that neither bloc would achieve a decisive majority. This morning, the probability that any coalition, from either side, will secure a stable majority quickly stands at just 2% to 3%. The market assigns a 60% probability to a "hung parliament" scenario and repeat elections.

It is worth noting that the Polymarket contract closes only when a prime minister is formally appointed and sworn in. With a long and difficult coalition negotiation now expected, Netanyahu leads in the betting markets but with less than 50% odds of actually forming a government. As political analyst Amit Segal noted in his analysis, the failure in predictions was comprehensive and extended to the surge in Arab turnout, which surprised all the pollsters as well.