It
seems
likely
that
a
small
group
of
traders
(or
possibly
a
lone
individual)
have
pushed
up
former
President
Donald
Trump’s
odds
on
Polymarket,
the
crypto-based
prediction
market,
by
heavily
betting
on
the
Republican
nominee.
There
has
been
a
good
deal
of
handwringing
about
this,
both
from
supporters
of
vice
president
and
Democratic
nominee
Kamala
Harris
on
X
(formerly
Twitter)
who
have
an
obvious
incentive
to
call
the
markets
manipulated,
and
from
the
mainstream
press.
“[T]he
surge
might
be
a
mirage
manufactured
by
a
group
of
four
Polymarket
accounts
that
have
collectively
pumped
about
$30
million
of
crypto
into
bets
that
Trump
will
win,”
The
Wall
Street
Journal
speculated.
-
21:33
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Indicator
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$70,000,
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Buterin
Outlines
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‘Scourge’
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01:30
What’s
Driving
Bitcoin’s
Recent
Price
Rise?
Indeed,
there
may
be
a
lone
bettor
who
has
gone
very
long
on
Trump.
But
that’s
not
necessarily
evidence
of
something
sinister.
Aubrey
Strobel
is
a
communications
partner
at
Bitcoin
app
developer
Trust
Machines
and
the
host
of
The
Aubservation
podcast.
First,
the
obvious
point:
it’s
not
just
Polymarket
where
Trump
is
rallying.
Trump
“yes”
shares
are
trading
at
around
59.9
cents
on
Polymarket
right
now,
indicating
the
market
sees
a
59.9%
probability
he
will
win.
(Each
share
pays
out
$1
if
the
prediction
comes
true,
and
zero
if
not.)
Predictit
–
a
U.S.
platform
with
strict
betting
limits
(which
would
in
theory
be
immune
to
the
Polymarket
whale)
–
has
Trump
at
56%.
Kalshi,
a
U.S.-based,
regulated
platform,
has
Trump
at
58%.
If
you
think
this
price
action
constitutes
“manipulation,”
you
would
have
to
wonder
why
Kalshi
–
a
platform
where
manipulation
would
be
reportable
–
is
trading
in
line
with
Polymarket.
The
online
bookies
also
have
Trump
ahead:
59%
at
BetOnline,
55%
at
Betfair,
and
60%
at
Bovada
to
name
a
few.
And
Trump
is
also
trending
up
in
the
poll
aggregates,
so
it’s
not
inconceivable
that
his
true
odds
of
winning
are
also
increasing.
Trump’s
rally
in
the
prediction
markets
coincides
with
Harris’
rough
Fox
News
interview
and
new
polls
show
Trump
trudging
upward.
Secondly,
the
fact
that
a
single
anonymous
entity
has
made
large
bets
is
not
by
itself
evidence
of
“manipulation,”
as
many
Harris
supporters
are
claiming.
Bloomberg
columnist
Matt
Levine
flatly
says:
“this
does
not
look
like
market
manipulation:
Fredi9999
is
not
buying
sloppily
with
the
effect
of
pushing
up
the
price,
but
rather
buying
carefully,
in
a
manner
that
seems
designed
to
get
him
a
lot
of
Trump
contracts
for
his
money.”
The
simplest
possible
explanation
is
that
a
trader
simply
thinks
Trump
is
underpriced
and
is
willing
to
bet
heavily
on
it.
The
mere
existence
of
a
large
buyer
does
not
imply
manipulation.
The
entire
premise
of
markets
is
that
prices
compress
available
information
by
rewarding
those
who
take
risk
to
express
their
views.
The
identity
of
the
traders
or
the
distribution
of
trades
is
irrelevant;
in
theory,
everyone
has
a
motive
to
extract
information
from
markets
by
betting
when
their
belief
about
the
fair
value
of
an
asset
diverges
from
the
market’s
value.
Markets
don’t
need
to
be
democratic
in
order
to
be
reliable.
They
just
need
the
most
informed
participants
to
financially
express
a
view.
Individual
traders
having
concentrated
ownership
of
an
asset
doesn’t
in
any
way
delegitimize
the
price.
No
one
questions
the
price
of
Apple
stock
because
Warren
Buffett’s
Berkshire
Hathaway
owns
a
lot
of
it.
This
is
a
long-winded
way
of
saying
the
market
is
never
“wrong.”
It
simply
reflects
all
available
information.
If
you
correctly
disagree
with
the
market,
you
can
be
rewarded
for
that
belief,
by
betting
yourself.
U.S.
users
have
alternatives
to
Polymarket,
which
is
barred
from
serving
them
under
a
regulatory
settlement.
If
you
believe
the
Polymarket
whale
a)
has
meaningfully
pushed
up
the
price
of
the
Trump
contract,
and
b)
is
wrong,
you
can
simply
bet
against
him
or
her
or
them
by
going
long
on
Harris.
Even
though
it’s
not
risk-free
–
Harris
still
needs
to
win
for
your
bet
to
pay
off
–
if
you
thought
her
“real”
odds
were
55%,
you
would
be
buying
something
worth
55
cents
for
40
cents
today.
Even
if
you
might
not
be
willing
to
do
that,
other
market
participants
will.
So
if
the
Polymarket
whale
is
indeed
misinformed,
now
that
we
know
there’s
a
(potentially
misinformed)
whale,
you
would
expect
the
odds
to
decline
as
traders
incorporate
this
new
information.
Unless
of
course,
the
prediction
markets
are
generally
reliable
and
the
whale
hasn’t
influenced
them
much.
But
let’s
assume
the
trader
really
was
spending
heavily
to
“paint
the
tape”
and
make
a
Trump
victory
appear
more
likely.
First,
it’s
not
even
clear
this
would
benefit
Trump.
It
might
cause
complacency
among
his
voters,
reducing
their
turnout
on
Election
Day
(or
even
galvanize
Harris
supporters
to
show
up
at
the
polls).
Second,
you
could
simply
spend
that
$30
million
on
ads
in
battleground
states
and
meaningfully
influence
the
race.
Polymarket
remains
as
of
yet
a
fairly
obscure
platform
so
any
PR
dividend
from
moving
the
odds
slightly
would
be
extremely
hard
to
quantify.
Plus,
as
Polymarket
itself
noted
in
a
detailed
blog
post
Monday
rebutting
the
manipulation
claims,
“if
any
user
has
any
reason
to
believe
that
trades
are
being
made
for
anything
other
than
financial
reasons,
it
is
easy
to
adjust
the
odds
to
account
for
this”
by
excluding
the
whales’
bets
Why
pay
attention
to
prediction
markets?
When
it
comes
to
elections,
markets
can
deliver
information
faster
than
pundits,
polls,
or
the
press.
This
trend
will
continue
through
the
November
election,
not
just
on
the
main
presidential
contract,
but
also
the
state-level
contracts.
Traders
have
a
financial
incentive
to
surface
nonpublic
information,
so
election
watchers
will
be
able
to
see
victory
probabilities
updated
in
real
time
for
all
50
states,
rather
than
waiting
for
Fox
or
CNN
to
call
them.
By
harnessing
trader
enthusiasm,
markets
can
and
do
outperform
designated
experts.
Additionally,
contracts
like
the
election
winner
contract
give
us
an
arguably
more
useful
informational
output
than
mere
poll
aggregates.
National
polls
showing
Harris
up
49%
to
Trump’s
47%
don’t
tell
you
that
much
about
her
actual
odds
of
victory:
what
matters
is
of
course
the
electoral
vote
tally
and
specifically
what
happens
in
the
battleground
states.
The
highly
liquid
Polymarket
election
winner
contract
compresses
all
of
that
information
and
gives
us
a
simple
estimate
of
each
candidate’s
odds
of
winning.
It’s
also
worth
remembering
that
a
60%
to
40%
lead
on
a
prediction
market
is
not
remotely
comparable
to
a
60%
to
40%
polling
lead.
Prediction
markets
should
be
thought
of
as
high-beta
derivatives
of
the
polls.
If
Trump
were
polling
at
51%
to
Harris’
49%
in
the
national
polls,
his
actual
odds
of
victory
would
be
90%
or
more.
In
prediction
markets,
40%
to
60%,
45%
to
55%,
or
60%
to
40%
odds
are
all
coin-flip
territory.
So
Trump’s
rally
on
Polymarket
does
not
reflect
a
massive
revaluation
in
his
odds
of
victory.
Polymarket
whale
or
not,
it’s
still
an
extremely
close
race.
Note:
The
views
expressed
in
this
column
are
those
of
the
author
and
do
not
necessarily
reflect
those
of
CoinDesk,
Inc.
or
its
owners
and
affiliates.
