Opinion polls may show a tight race between Kamala Harris and Donald Trump, but on upstart prediction markets, Trump has suddenly become a heavy favourite.
Driving the news: Bettors on Polymarket, a popular prediction market where users can place binary bets on the outcome of events, are giving Trump a ~60% chance of winning the presidential election, up sharply from even odds at the start of the month.
- The heavy betting on Trump has raised eyebrows because it doesn’t seem to reflect what the polls are showing, which is a contest that’s essentially a coin flip.
Why it’s happening: The jump in Trump’s odds appears to be driven by just four Polymarket “whales” — users who place unusually large bets — plonking down around US$30 million on the former President, enough to move the odds significantly in a relatively small market.
- Some analysts have concluded that all four of the whales are actually the same user, sparking questions about their possible motives.
Why it matters: This is the first major election where prediction markets have been sizeable enough to generate headlines, raising concerns that they could be vulnerable to manipulation.
- That manipulation may not even be geared toward influencing the outcome of the election — it could, for example, be a bid to move prices of other correlated assets (like stocks) that stand to gain from a Trump win.
Bottom line: There’s no way of knowing with certainty why a few people (or maybe just one person) are betting so big on the U.S. election, but the rise of anonymous wagering on real-world outcomes is bound to raise questions about the possibility of prediction markets influencing what happens in the real world.—TS