The US election cycle is reaching its climax, with Donald Trump and Kamala Harris gearing up for a showdown on November 5th. While candidates strategize to secure victory, the spotlight has fallen on prediction markets, platforms where users bet on the outcome of global events. One such platform, Polymarket, has garnered significant attention for its cryptocurrency-based betting, amassing an impressive $2.5 billion in wagers on the US presidency. This influx of money has propelled Polymarket’s election betting odds into the limelight, becoming a hot topic in both mainstream and social media discussions.
Alex Marinier, founder of venture capital firm New Form Capital, which invested in Polymarket’s seed round, believes in the platform’s potential to become a source of “market-based truth.” The platform has also attracted the attention of renowned angel investor Naval Ravikant, who participated in the startup’s initial funding round. However, beneath the surface of this financial frenzy and the allure of cryptocurrencies, concerns regarding market manipulation have begun to surface, casting a shadow over Polymarket’s credibility.
One trader, identified as a French national and using the alias Fredi9999, has placed substantial bets in favor of Trump, leading to a surge in his odds of winning from 49% at the start of October to 64% currently. Rumors of coordinated activity have emerged, alleging that this trader manages three additional accounts under different pseudonyms. Addressing these concerns, Polymarket conducted an investigation and concluded that the trader’s bets were based on personal opinions about the election outcome, with no evidence of manipulation. Marinier acknowledges the possibility of overzealous participants placing bets based on emotional support for their preferred candidate but believes that “smart money” will eventually correct any anomalies arising from such irrational behavior.
Another point of contention is the potential for foreign influence on the market. Polymarket, since 2022, has been barred from accepting bets from US customers due to a deal with the Commodity Futures Trading Commission (CFTC). This restriction has raised concerns about the influence of foreign money on the platform’s predictions.
The overwhelming odds in favor of Trump, generated by Polymarket, starkly contrast with national polls which predict a closer contest. For instance, the New York Times/Siena College national poll shows Trump and Harris tied at 48%, while CNN/SSRS polls also indicate a deadlocked race at 47%. Christian Costa, a consultant at strategy and communications firm Wachsman and a former member of the Fox News Decision Desk team, emphasizes the key distinction between opinion polls and prediction markets. “Public polling asks respondents who they intend to vote for, while prediction markets ask users to place bets on who they think will win—different questions to which an individual may have different answers,” Costa explains. “Voting decisions are driven by personal beliefs, while market forces drive bets.”
Marinier further argues that polls are more susceptible to biases due to the lack of economic stake compared to prediction markets, which offer an “economic bounty on truth.” However, the validity of this argument hinges on whether individuals who may not vote in the US election or benefit from a US presidency have a legitimate stake in the outcome.
Joe McCann, founder and CEO of cryptocurrency hedge fund Asymmetric, believes that global participation in Polymarket makes sense given the global ramifications of US presidential elections. He also questions the notion of US citizens being barred from the platform, suggesting that the use of VPNs allows users to bypass geographical restrictions. This accessibility has been confirmed by the abundance of online resources explaining how to circumvent these barriers.
Despite this, not everyone is convinced. Dr. Arman Meguerian, founder and CEO of Bitcoin-based startup Timestamp Financial, points out the demographic bias in Polymarket’s user base. “The typical user of a cryptocurrency-based betting platform skews towards younger individuals with a high-risk tolerance, which could distort the signal. These biases create a selective sample that may overrepresent certain viewpoints while missing others,” Meguerian argues.
The ongoing debate surrounding Polymarket’s election predictions raises critical questions about the reliability of such platforms, the potential for manipulation, and the influence of various factors like foreign money and user demographics. As the election approaches, it will be fascinating to see how these predictions unfold and whether they align with the actual outcome.
