Betting platforms like Polymarket and Kalshi have surged into the limelight, reporting millions in bets placed on the upcoming presidential elections.
Many are left wondering what caused this surge in election betting platforms.
On the popular platform Polymarket, Donald Trump’s odds have soared in just a couple weeks, with the platform now reporting a 62% chance of a Trump victory.
This data—widely shared on social media and by some in mainstream media—might suggest that Trump is the favored candidate. But does it?
Why did betting markets become popular all of a sudden?
The truth is that election betting isn’t a recent invention. Wagering on political races has long been a part of American elections since almost forever.
Today, the game has evolved. What used to be informal gambling is now a tech-driven market powered by platforms like Polymarket, Kalshi, and PredictIt, which offer real-time betting on election outcomes.
But how do these platforms work? In simple terms, they operate like stock markets for events.
Users buy shares in specific outcomes—say, “Trump wins” or “Harris wins.”
The share prices fluctuate between $0 and $1 based on demand, with higher demand signalling greater perceived likelihood.
When the event resolves, shares in the correct outcome pay out at $1, while the others become worthless.
This setup provides a unique look at candidate support and, some argue, serves as a “reliable” measure of public sentiment.
Thanks to the mainstream adoption of online betting, platforms like Polymarket have drawn attention from social media, major news outlets, and even political influencers.
Since the start of the 2024 race, Polymarket has reported betting volumes reaching an astonishing $2.8 billion.
This influx of data has driven interest in betting odds as an alternative metric for gauging candidate strength.
And, as prediction market expert Nate Silver recently joined Polymarket as an advisor, the site has gained credibility, with its odds often compared alongside traditional polling data.
In theory, betting markets have an advantage over traditional polling.
While polls are snapshots that may miss late-breaking momentum, betting markets allow users to adjust bets in real time based on new information.
While some argue that the popularity of betting markets is introducing the element of gambling into elections, it must also be noted here that unregulated political donations (PAC) have already blurred the line between financial influence and betting on political outcomes many years ago.
Are these markets subject to manipulation?
A key caveat to consider in this context is that punters are not always voters. Some platforms with large betting volumes are illegal in the US where the elections are actually held.
In addition, financially powerful individuals or groups can wield significant influence over these platforms.
Analysts from Chaos Labs and Inca Digital found that much of Trump’s reported 67% odds on Polymarket could be linked to a small group of accounts using disproportionately large buy orders to sway market odds.
In fact, a single trader (known as “Fredi9999”) and several potentially linked accounts reportedly hold $40 million in Trump shares on the platform.
This outsized involvement means that just a few actors, rather than a representative crowd, may be driving market predictions, creating an inflated sense of Trump’s electoral strength.
This scenario raises questions about how betting markets might sway public opinion.
If bettors with deep pockets create an impression that Trump is the clear favourite, they could affect the expectations of undecided voters or embolden his supporters.
Elon Musk, for example, has cited betting odds as evidence of Trump’s supposed momentum, trying to get more voters to the side of Donald Trump.
Some researchers argue that by “placing their thumb on the scale,” financially powerful bettors might artificially create momentum that doesn’t fully align with actual voter sentiment.
This is a form of “soft influence”—one that subtly shifts perceptions rather than changing votes outright but can still impact the overall election narrative.
Another argument made by behavioural economists is that by having money on the line on a political outcome, individuals could try and persuade others to join them, based solely on the motive of financial gain.
Can betting odds actually predict elections?
The idea of using betting odds to forecast election results has become popular, with some even claiming it’s more accurate than traditional polling.
Betting markets are often touted as a “wisdom of the crowd” approach, with predictions driven by informed participants who have financial stakes in the outcome.
Yet, evidence of this predictive power is questionable. For example, prediction markets in 2016 and 2020 failed to capture the strength of Donald Trump’s support.
While polls were also off-mark, betting markets proved equally vulnerable to “groupthink” and failed to account for turnout nuances and state-level shifts.
On that note, betting markets could set the stage for claims of election fraud if outcomes don’t align with market expectations.
A key distinction between polls and betting odds is that polls attempt to capture a snapshot of voter intent, while betting markets reflect where participants are willing to put their money, not necessarily their votes.
This distinction became clearer with the recent revelations of “wash trading” on Polymarket.
Source: Financial Times
In wash trading, a participant buys and sells shares in quick succession to create artificial trading volume.
According to research by Chaos Labs, nearly one-third of Polymarket’s presidential market volume could be attributed to wash trading.
Such manipulation distorts the market’s perceived accuracy by amplifying certain odds through non-genuine trades.
Despite these issues, betting markets can sometimes provide insights during moments of uncertainty.
When President Joe Biden faced calls to step down after a series of verbal gaffes, prediction markets quickly reflected heightened speculation, even as polls lagged in response.
Thus, while betting markets can reveal short-term reactions, they are less reliable as standalone predictors of complex elections, where factors like state-by-state polling, demographic turnout, and electoral college dynamics matter.
What’s next for betting platforms?
What happens to platforms like Polymarket and Kalshi once the election is over?
In reality, betting platforms typically experience a sharp drop in volume after major events, leading to a lull until the next high-stakes occasion.
To counter this, platforms often diversify, creating markets around global events, sports outcomes, or financial events.
Some platforms like PredictIt and Kalshi also seek regulatory approval to operate year-round in the US, aiming to stay relevant beyond election cycles.
However, Polymarket’s crypto-based, offshore structure faces unique challenges, including regulatory scrutiny and questions about legitimacy, especially given the high levels of wash trading uncovered in its 2024 presidential market.
The high-profile nature of election betting also brings these platforms under closer regulatory and media scrutiny.
The US Commodity Futures Trading Commission (CFTC), for example, has banned or restricted political betting markets due to concerns that they could be manipulated or impact public trust in democratic processes.
After the election, platforms will likely face even greater pressure to address issues like wash trading and high-volume traders, potentially reshaping how they operate in the future.
Some platforms will continue to evolve and offer additional services.
As long as there is demand for betting platforms, there will be no shortage of innovation. This evolution could be amplified by the growing demand of cryptocurrency and discussions around their use case.
Final thoughts
Election betting markets have become a fascinating, if flawed, tool in this years’ election narrative.
They offer a sense of who bettors think will win and, at times, can capture shifts in public opinion more quickly than polls.
But they are far from a perfect predictor.
The influence of wealthy backers and evidence of market manipulation show that betting odds are not as clear-cut as they might appear.
A few deep pockets can shape the numbers in ways that aren’t always visible to the casual observer, turning these odds into more of a suggestion than a reliable forecast.
While the odds may hint at trends, the final outcome rests with voters, not bettors.
And as Election Day approaches, it’s worth keeping in mind that the only “odds” that truly matter are those tallied at the ballot box.
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