Polymarket’s $2.7B Bets Trump Vs. Harris raises handling concerns

There is less than a week left until election day

Donald Trump is traveling to New Mexico and Virginia in the final days of the campaign, making a risky detour from the seven battleground states to spend time in places where Republican presidential candidates haven’t won in decades. The former president will campaign in Albuquerque, New Mexico, on Thursday and Salem, Virginia, on Saturday. FOX’s LiveNOW host Josh Breslow spoke with David Becker, Executive Director and Founder, Center for Innovation and Election Research about the latest.

LOS ANGELES – As Election Day approaches, prediction market Polymarket has drawn attention with its $2.7 billion betting pool on the 2024 presidential race between Donald Trump and Kamala Harris. Polymarket odds currently show Trump with a 66% chance of victory.

However, a recent analysis by blockchain experts suggests that almost a third of this activity could be due to washed trading, casting doubt on the platform’s reliability as a predictive tool.

Possible evidence of artificial trading on Polymarket

Blockchain research firms Chaos Labs and Inca Digital, known for digital market security and data analysis, recently reported findings that cast doubt on Polymarket’s reported $2.7 billion transaction volume. According to a Fortune reportthe firms estimate the actual volume at $1.75 billion, attributing the discrepancy to washed trading — a practice in which the same party repeatedly buys and sells assets to increase activity.

This artificial increase in volume, particularly in Trump’s favor, raises questions about whether the reported shares reflect real market sentiment or have been skewed by manipulation.

What is Polymarket?

Polymarket is a decentralized prediction market platform where users bet on the outcomes of events such as elections, using blockchain technology for secure and anonymous transactions. Unlike traditional sportsbooks, Polymarket does not rely on a central intermediary, giving users the autonomy to place predictions directly on the platform.

The platform gained additional visibility thanks to the support of high-profile individuals, including Elon Musk. Musk frequently tweets Polymarket betting odds on X (formerly Twitter), where he recently shared a link to the platform, saying: “It’s crazy how much people are betting on these predictions.”

Along with Musk’s massive social media following, his tweets boosted Polymarket’s reach and perceived legitimacy.

Could betting markets influence the outcome of the election?

The popularity of electoral betting has raised concerns about the potential impact on voter perception and turnout. In theory, platforms like Kalshi and Polymarket reflect public sentiment through betting odds, but the alignment of these odds with traditional polling remains mixed. Kalshi, a legally regulated US election betting platform, show at present Trump with a similar lead, while traditional polls indicate a closer race.

NPR recently reported that Kalshi CEO Tarek Mansour has defended election betting as a way to give ordinary citizens a chance to hedge against political risk, noting that federally regulated markets can deter manipulation.

During live coverage of former President Donald Trump’s rally at Madison Square Garden last weekend, an election betting ad aired on the Right Side Broadcasting Network, a conservative media outlet. The ad, promoting Kalshi’s election betting platform, came as Trump addressed the crowd, saying: “Bet on the US election. Bet $100 on Trump, get $175”.

Scott Owens points to his computer screen as he describes how to hedge a position to make a prediction about the U.S. presidential election at his home in Madison, Wis., on October 13, 2024. (Photo by Kayla Wolf for The Washington Post via Getty

Meanwhile, some experts argue that betting markets could influence election results by shaping voter beliefs and enthusiasm.

Rajiv Sethi, a professor of economics at Barnard College who studies prediction markets, said NPRinflated odds for a candidate could influence factors such as fundraising, volunteer efforts, and overall voter morale.

Sen. Jeff Merkley (D-Ore.) recently voiced his opposition, proposing legislation to ban election betting.

Merkley argues that betting on elections corrupts democratic processes, turning elections into financial markets rather than civic exercises. “Allowing election betting is a big mistake,” Merkley told NPR. “Corrupt our American elections by turning principles into pockets.”

Source

This article is based on reports from the Associated Press, Fortune and NPR, with information from blockchain research firms Chaos Labs and Inca Digital.