The News
Online betting markets took a victory lap following Donald Trump’s decisive win in the US presidential election, given that their odds favored Trump for weeks before the vote.
Crypto-based platform Polymarket, which is headquartered in New York but doesn’t permit US users, said it “proved the wisdom of markets over the polls, the media, and the pundits.”
And the founder of Kalshi, which got legal authorizations for Americans to bet on the outcome of the race, said: “Polls were overwhelmingly inaccurate while prediction markets were spot on.”
Both exchanges, along with other prediction markets, had Trump as the odds-on favorite to win in recent weeks: Proponents said they are more reactive to developments and momentum shifts in the race compared to polls, but some critics argued they are vulnerable to manipulation by right-wing users placing massive wagers.
SIGNALS
Election solidifies betting markets’ place in news environment
The betting markets have been a defining feature of the 2024 race, and their accurate predictions means they could be here to stay, analysts said. Ultimately, they “proved more prescient after Trump won the polarized race,” Reuters wrote, especially as polling averages showed a coin-flip race. One University of Michigan economics professor said: “We just added another chapter in the history of political prediction markets. Count 2024 as a clear win for prediction markets over polls, economic models, and polling aggregators.” Bloomberg’s Joe Weisenthal said prediction markets are “firmly part of the news environment now,” even though they failed to accurately forecast that Trump would win the popular vote, which he is now on track to do.
Payments will be massive
The payout for people around the world who correctly bet on the election based on predictions from Polymarket and Kalshi is set to total about $450 million. One French trader, who became known as the “Polymarket whale,” wagered about $40 million on Trump-related bets, skewing the market in Trump’s favor. That investor is now set for a payout of about $80 million. But many payments won’t come for a while — Kalshi isn’t closing its market until Inauguration Day, while Interactive Brokers and Robinhood are waiting until the US Congress certifies the results in January.