Polymarket, the popular prediction site, has recently seen a spike in support for a Donald Trump victory in the presidential election.
On October 5, the race was 49.8 to 49.5 in favor of Harris, A week later, the race was 55.4 to 44.7 in favor of Trump. Today, The board shows Trump at 60.1 and Harris at 39.8.
Have Trump's chances improved that much? Perhaps they have. But it wouldn't be because of the odds shifting on Polymarket.
Four accounts on the site have poured $30 million into bets that Trump will win. And one analysis of the moves shows that the four accounts probably belong to the same person.
“There’s strong reason to believe they are the same entity,” said Miguel Morel, chief executive of Arkham Intelligence, a blockchain analysis firm that examined the accounts.
Accounts named Fredi9999, Princess Caro, Michie, and Theo4 have collectively spent nearly $24.7 million on the simple question: Who will win the 2024 presidential election?
Their “Yes” bets on former President Donald Trump have helped drive the cost to 61 cents, implying 61% odds of a win come November 5.
Such bets have had a massive effect because few buyers and sellers trade on the relatively small platform, experts say.
Vice President Kamala Harris may have a two-point lead in national polls, but the crypto-powered betting platform gives Trump a massive lead — Harris bets cost only 37 cents, implying a 37% chance of a win.
“It’s about the depth of the market,” Jake Dwyer, founder of venture fund The Factor Corp, told DL News. “If the market interest exclusively exists at a tight range, as soon as you want to buy a big amount, you find there’s no size offers.”
Polymarket is investigating the matter using outside experts, says a source for DL News. Elon Musk has been citing the Polymarket predictions for a while, spreading the word to 200 million users. It's believed that Musk's enthusiastic endorsement of Polymarket being "more accurate than polls" has actually driven the prediction of Trump winning higher.
But Polymarket, as noted above, is a small market and can be influenced by relatively small bets.
Prediction markets are tools to take financial positions on outcomes that are hard to capture with traditional instruments.
— Jake Chervinsky (@jchervinsky) October 16, 2024
They reveal the current sentiment of market participants, and that's all.
They aren't "oracles of truth" any more than stocks, futures, or any other tool.
Interestingly, Harris is predicted to win the popular vote 68 to 32 over Trump. Harris will likely win Illinois, New York, and California by more than seven million votes combined, giving her a fairly substantial lead in the popular vote (Biden won California by five million votes, New York by two million, and Illinois by more than a million.)
"While $30 million might seem costly, it is sufficient to swing the odds on Polymarket and not a large outlay for a deep-pocketed individual seeking to influence the election," added Adam Cochran, managing partner of the venture capital firm Cinneamhain Ventures.
“It is by far the most efficient political advertising one can buy,” Cochran said.
But is what the pro-Trump bettors are doing underhanded? Most certainly not.
“Purchasing a large number of shares on one outcome does not require any ulterior motive or effort to manipulate the market,” said Harry Crane, a professor of statistics at Rutgers University. Crane notes that European markets also show Trump with an edge in the race.
As long as we understand the nature of these predictive markets and their small size, I don't see a problem, even if pro-Trump accounts are trying to game the system.
