Midterm elections explained: Meaning, process, and impact

Midterm elections are an important part of the United States election cycle, providing voters with an opportunity to reshape the makeup of the federal government between presidential elections which occur every four years. 

Held halfway through a president’s four-year term, midterms let voters determine the party makeup of the US House of Representatives and the US Senate between Democrats, Republicans, or third parties.

While the president of the United States is not elected during the midterms, and turnout is generally lower, the results of the midterm elections can still have a significant impact on the remainder of a presidential term. For example, if a particular party, Democrats or Republicans, control the House or Senate, it can affect the president’s ability to advance legislation or increase the possibility of a divided government. 

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Midterm elections are elections held near the midpoint of a U.S. president’s four-year term in office. Held every four years, midterms take place two years after a presidential election, and two years before the next one. 

Unlike the presidential election, voters are not deciding who should work from the Oval Office during the midterms. Instead, congressional seats are at center stage during the midterm elections. 

All seats in the U.S. House of Representatives are up for election every two years, as representatives serve two-year terms in Congress. In theory, this means the entire House could change from one election to the next. 

On the other hand, the Senate works differently. Senators serve six-year terms and are separated into three classes. Thanks to the class distinction, this ensures that one-third of Senate seats are up for election or re-election every two years. 

In addition to House and Senate voting, midterms may also include gubernatorial or local elections. 

As a result, midterms give voters a chance to significantly influence government at multiple different levels, even though a presidential race is not on the ballot. 

Midterm elections operate similarly to other U.S. elections, like the presidential election. 

Before the general elections take place, candidates typically compete in Republican or Democratic primary elections to determine who will represent their respective political parties in the general election. These primary elections are held earlier in the year, ahead of the general midterm elections. 

Then in November, the midterm general elections are held at the same time across the states. During these midterm general elections, voters choose from the qualified candidates to fill all the seats in the House, and one-third of the Senate seats. 

Exact voting and registration procedures may vary by state. Typically though, eligible voters register as Republicans or Democrats through their state and then cast ballots using the voting methods that are available to them, like in-person or via mail-in ballots. 

During midterm elections, multiple congressional seats are up for grabs. This includes seats for both the House of Representatives and the Senate.

In addition to these two major pieces of the election, it is not uncommon for states to add the gubernatorial election to decide who will become the state’s next governor, or other local elections. 

All voting House of Representatives seats are up for election every two years, as House members serve two-year terms in Congress. Therefore, each midterm, all 435 voting House of Representative seats are placed on the ballot for each particular congressional district. 

Approximately one-third of the U.S. Senate seats are contested during the midterms. Senators serve six-year terms and are split into three classes, meaning that approximately one-third of the chamber is on the ballot every two years thanks to its staggered election schedule.

Some states will hold gubernatorial elections during the midterms, adding to the critical importance of the midterm elections.  

Certain jurisdictions may also add elections for state legislatures or other local government positions during the midterm elections. 

As a whole, this means that the consequences of a midterm election can reach far beyond the White House. 

When the midterm elections come to a close, an important question for future governance is answered: which party will control Congress? 

The House and Senate play significant roles in the shaping and passing of federal legislation. Therefore, if a president's party controls both chambers, the administration may have an easier path towards advancing pieces of legislature that align with their campaign promises or legislative agendas.  

On the other hand, if a president were to lose control of a chamber, or the chambers are split, they can make the process of passing federal legislation more difficult. 

Additionally, congressional control has an impact beyond the passage of individual bills. For example, a party with the majority can exert influence over congressional leadership, like for particular committees that are critical to congressional oversight. 

A shift in control of the House or the Senate can therefore change that leadership, legislative priorities, investigations, and oversight. 

While midterm elections play a significant role in shaping political bodies, they also greatly influence political markets, forecasts, and future policy decisions. 

Though election outcomes are uncertain and not final until every vote is counted, citizens can assess the future of politics through polling, candidate news, and via political prediction markets. 

For example, Kalshi’s American Power Index (KPOW) is designed to provide a measure of expectations about future political control in the United States. The index is built using two foundational components which incorporate both current political control and forward-looking expectations. 

The result is a single measure of the changing balance of America’s politics between Democrats and Republicans. 

In other words, instead of looking at one individual congressional race at a time, KPOW gives a broader view of the expected overlay of power, using market and non-market data to provide a real-time overview of the political landscape and its potential future. 

Part of the index’s output uses Kalshi’s underlying political prediction market data to provide inputs for future party control of the House and Senate, as well as the margin of victory and potential government shutdown risk. 

Midterm elections are a central part of the U.S. political system. Held halfway through a president’s four-year term, midterms give voters an opportunity to elect every member of the House, and roughly one-third of the Senate. Additionally, voters may have the opportunity to participate in local or gubernatorial elections as well. 

Their importance extends beyond the individual races and candidates on the ballot. 

Midterm results can reshape the control of Congress, altering the prospects for a president’s legislative process and future policy decisions in the process. 

Those possibilities make the midterms an important event for political forecasting. However, expectations can evolve throughout an election cycle as voters, analysts, and traders deal with new information about individual races, volatile polls, and the ever-changing political environment. 

Kalshi’s American Power Index (KPOW) provides a simpler way to follow the changing expectations, gathering information about current and future political control and displaying the real-time changes with a single measure. 

As the next midterm elections approach, traders and interested political observers can follow political prediction markets and KPOW to gain a better understanding of how Congress, and the balance of power, are changing. 

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