America Is Slow-Walking Into a Polymarket Disaster
- Prediction markets, which allow users to bet on the outcomes of future events, frequently enough fail to deliver significantly more accurate forecasts than chance or customary polling, and...
- While some individuals boast of accomplished predictions - such as one user who claimed his site correctly predicted 26 of 28 award winners - the inherent predictability of...
- These markets are also vulnerable to intentional manipulation.
For the past week, I’ve found myself playing the same 23-second CNN clip on repeat. I’ve watched it in bed, during my commute to work, at the office, midway through making carrot soup, and while brushing my teeth. In the video, Harry Enten, the network’s chief data analyst, stares into the camera and breathlessly tells his audience about the gambling odds that Donald Trump will buy any of Greenland. “the people who are putting their money were their mouth is-they are absolutely taking this seriously,” Enten says. He taps the giant touch screen behind him and pulls up a made-for-TV graphic: Based on how people were betting online at the time, there was a 36 percent chance that the president would annex Greenland. “Whoa, way up there!” Enten yells, slapping his hands together. “My goodness gracious!” The ticker at the bottom of the screen speeds through other odds: Will Gavin Newsom win the next presidential election? 19 percent chance. Will Viktor Orbán be out as the leader of Hungary before the end of the year? 48 percent chance.
These odds were pulled from Kalshi, which hilariously claims not to be a gambling platform: It’s a “prediction market.” People go to sites such as Kalshi and Polymarket-another big prediction market-in order to put money down on a given news event.nobody would bet on something that they didn’t believe would happen, the thinking goes, and so the markets are meant to forecast the likelihood of a given outcome.
Listen: Prediction markets and the “suckerification” crisis, with Max Read
Prediction markets let you wager on basically anything. Will Elon Musk father another baby by June 30? Will Jesus return this year? Will Israel strike Gaza tomorrow? Will the longevity guru Bryan Johnson’s next functional sperm count be greater than “20.0 M/ejac“? These sites have recently boomed in popularity-especially among terminally online young men who trade meme stocks and siphon from their 401(k)s to buy up bitcoin. But now prediction markets are creeping into the mainstream. CNN ideas.repec.org found that Polymarket’s forecasts in the weeks leading up to the 2024 election were only marginally better than random guessing.
These markets are also vulnerable to intentional manipulation. In 2012, a bettor on the now-defunct Intrade platform placed substantial wagers on mitt romney in the two weeks before the election, artificially inflating his chances in the betting line. Slate reported on this activity, noting the bettor’s actions created the impression of a much closer race.
Researchers examining the trades determined the bettor wasn’t motivated by profit.”More plausibly, this trader could have been attempting to manipulate beliefs about the odds of victory in an attempt to boost fundraising, campaign morale, and turnout,” they wrote in a paper available on papers.ssrn.com.
The bettor lost at least $4 million, but the researchers concluded that the potential impact on media coverage and voter behavior could have been achieved for a cost comparable to a single prime-time television advertisement.