Polymarket’s $2.7 billion Trump and Harris bets raise manipulation concerns

LOS ANGELES – As Election Day approaches, prediction marketplace Polymarket has attracted attention with its $2.7 billion betting pool on the 2024 presidential race between Donald Trump and Kamala Harris. Currently Polymarket’s odds show Trump has a 66% chance of winning.

However, a recent analysis by blockchain experts suggests that almost a third of this activity may be due to fraudulent 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 call into question Polymarket’s reported $2.7 billion transaction volume. According to a fate reportThe firms estimate the actual volume at $1.75 billion and attribute the discrepancy to wash trading, a practice where the same party repeatedly buys and sells assets to inflate activity.

This artificial increase in volume, particularly in favor of Trump, raises questions about whether reported rates reflect true market sentiment or are distorted by manipulation.

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What is Polimarket?

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

The platform gained greater visibility thanks to support from high-profile individuals, including Elon Musk. Musk frequently tweets Polymarket’s 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.”

Thanks to Musk’s massive following on social media, his tweets strengthened Polymarket’s reach and perceived legitimacy.

Can betting markets influence the election outcome?

The popularity of election betting has raised concerns about potential impacts on voter perception and turnout. In theory, platforms like Kalshi and Polymarket reflect public sentiment through betting odds, but the compatibility of these odds with traditional voting remains mixed. Kalshi, a legally regulated US election betting platform currently showing While Trump has a similar advantage, traditional polls point to a tighter race.

Lately on NPR reported Kalshi CEO Tarek Mansour defended election betting as a way to offer ordinary citizens a chance to hedge against political risks, noting that federally regulated markets can deter manipulation.

During the live broadcast 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 appeared with Trump addressing the crowd with the caption: “Bet on the US election. Bet $100 on Trump, win $175.”

Scott Owens points to his computer screen as he explains how to hold position to predict the U.S. Presidential Election at his home in Madison, Wisconsin, on October 13, 2024. (Photo: The Washington Post, Kayla Wolf via Getty)

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

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Rajiv Sethi, a Barnard College economics professor who studies prediction markets. he told NPRHigh odds for a candidate can influence factors such as fundraising, volunteer efforts and overall voter morale.

Sen. Jeff Merkley (D-Ore.) recently spoke out against this and suggested: legislation banning election betting.

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

Source

This article draws on reporting from the Associated Press, Fortune, and NPR, and insights from blockchain research firms Chaos Labs and Inca Digital.