It’s a bull market for Donald Trump. The former president has seen his odds to become U.S. president surge over the past few weeks, from slight underdog to -160 favorite at Bovada (find out more with our Bovada Review) as we go to press. As for the prediction markets, Trump is also available at 59% at Polymarket; that’s the equivalent of -144 using good, old-fashioned American odds.
Elon Musk is behind this. Musk specifically advocated for Polymarket on his social media site earlier this month, claiming it’s a more accurate election forecast than the polls can provide – because “actual money is on the line.” At the time, Polymarket had Trump’s lead over Kamala Harris and the Democratic Party at 3%, about the same edge that Harris had (and still has) over Trump in the polls.
Betting on Trump and the Republicans has only increased since then. So what’s the deal? Is Musk correct in saying that prediction markets are more trustworthy than polls? Yes, but then again, very much no.
Are the Politics Odds Better than the Polls?
They can be. The “wisdom of crowds” is a thing, but to harness that wisdom, you need certain guardrails in place. You need to limit the size of the market, including the number of bettors/traders and the maximum bet/contract size; if you don’t, anyone with enough money can come in and distort the marketplace as they see fit.
That’s why until very recently, the only prediction markets that were allowed to serve up politics odds in the United States were academically based, like the Iowa Electronic Markets (University of Iowa) and PredictIt (University of Wellington). Speaking of which, IEM has Harris and the Democrats up 53-46 at press time, while PredictIt has one market with Trump ahead 55-50, and another with Harris a coin flip to become president.
When you take off those guardrails (5,000 traders per market, $850 per contract) and let just anyone throw their money around, it only takes one person with deep enough pockets to come in and bend the marketplace to their will. That appears to be the case at Polymarket; a trader named Fredi9999 joined the platform in June 2024 and bought up $8.7 million worth of shares betting on Trump to win the election, and another $5.7 million or so in other Trump-related markets – even Trump winning the popular vote.
Biggest current user on Polymarket is “Fredi9999” — who is himself a curiosity.
He is by far the largest holder of Trump shares, checking in at 7.2 million shares and counting.
The user has a total of $6.4 million in positions, all of them on Trump. He also has a lot of cash… pic.twitter.com/VQFdauqKRC
— Domer (@Domahhhh) October 7, 2024
Why Bet on Trump?
It isn’t necessarily because they want him to win. We can’t peer into Fredi9999’s soul, since we don’t know anything else about who that person is, but these trades could be interpreted as hedge bets. Maybe Fredi9999 is a business person who’s concerned that a Trump victory will be bad for business, so why not protect your position with a wager that will deliver some profit at the front end?
Or perhaps Fredi9999 is trying to influence the 2024 U.S. election. If enough people are swayed by Trump’s improved position in the election markets, and on the politics odds board, maybe they’ll change their votes as well. Then again, maybe that’s exactly what Fredi9999 wants Harris and the Dems to think, so they’ll organize and do what it takes to fight back. Double-bluff~!
Data suggests a single entity has been purchasing all Trump related bets on @Polymarket totaling $26 million.
– Fredi9999
– PrincessCaro
– Michie
– Theo4
Taking a look at their betting activity we can analyze when the accounts are placing bets.
What’s most interesting is when… pic.twitter.com/2eSv2AKRhW— Fozzy (@fozzydiablo) October 16, 2024
Is Fredi9999 Elon Musk?
Some people think so, given the timing of the trades in question and Musk’s tweets about Trump. But maybe the fact that fellow tech bro and “PayPal Mafia” cohort Peter Thiel is one of Polymarket’s backers has more to do with all this. Thiel and Ethereum founder Vitalik Buterin reportedly invested some $70 million in Polymarket this past May – perhaps anticipating the legalization of privately-run prediction markets dealing in politics within U.S. borders.
Whatever the case, if you’re going to “vote with your money” and bet on politics, make sure you understand the environment you’re walking into. We’ve got all sorts of articles here at Digital Wager Wire to help you make smarter bets, including the latest industry news and politics betting sites reviews, so use them wisely, and bet accordingly.
