This is a linkpost for https://jorgevelez.substack.com/p/the-mysterious-trump-buyers-on-polymarket
The Mysterious Trump Buyers on Polymarket
10Mitchell_Porter
7Ali
3NicholasKees
7Hastings
9Annapurna
1Morpheus
3Rafael Harth
2Annapurna
1Morpheus
1mirskat
New Comment
Isn't this just someone rich, spending money to make it look like the market thinks Trump will win?
3Just adding some additional context that might be useful. PredictIt is a similar election betting platform but has a cap on the maximum amount traders are able to bet (I think <$1k, so relatively low). This means that if Polymarket is a money-weighted information aggregation mechanism, PredictIt is a person-weighted information aggregation mechanism. As noted in the post, from 6th October to just now Trump has gone from 50.8 to 60.1 meaning a difference of 1.6 cents with Kamala to a 20.2 cent difference (18.6 cent swing). On predictit he's gone from 51:53 to 55:48 on the same interval (9 cent swing). Of course it's possible that people on PredictIt are changing their bets due to Polymarket prices (eg. by arbitraging), but there's some evidence that at least half the change isn't due to these large bettors (whether those large bettors are trading based on private information, for manipulation purposes, or other reasons).
What are the odds that Polymarket resolves “Trump yes” and Harris takes office in 2025? If these mystery traders expect to profit from hidden information, the hidden information could be about an anticipated failure of UMA instead of about the election itself.
1
1I would say very low?
I would also rank the theory that these mystery traders have hidden information as low. As of right now, based on what I have uncovered, I would say that the mystery trader(s) could be one the following (rank in order of what I think more likely to least likely):
1. A wealthy francophone european, somewhat involved in crypto and/or tech, who believes Trump will win and is betting a somewhat trivial amount (to this person) on this outcome. It is key to note that the main account has been trading since June, yet it only started seriously trading these markets after Musk appeared with Trump on stage.
2. A somewhat sophisticated entity that has a proprietary model that has Trump winning as a higher outcome, and believes the odds are mispriced. This entity realized that Polymarket had sufficient liquidity to allow it to bet 8 figures and move the price roughly to what it thinks Trump's real odds are. This entity is likely foreign, and thus it has not been able to trade on Kalshi.
3. An insider of the Trump campaign that is using internal information to make a more informed trade. Perhaps this is someone related to Elon. It could also be someone who understands that since May last year people have been using Polymarket as yet another gauge of how this election might turn up, and by pushing the odds on Poly they are distorting the narrative 18 days before the election.
Can someone who is already trading on Polymarket or is planning to do so soon tell me if there are any hidden fees (or ways my money might be locked up for longer than I expect) if I trade on Polymarket? Four years ago I got hit by enormous ether gas fees on Augur, which still made my bet positive EV, but only barely so (I had to wait quite a while for the gas cost to go that low and was loosing out on investing the money and my attention). I plan to bet ~$3K-$7K and think Kamala Harris has a 45% chance of winning. Is that enough for all the transaction costs to vanish?
You should be good (though I have only bet once; haven't withdrawn yet, so can't guarantee it). I think the gist of it is that Polymarket uses layer 2 and so is cheaper.
There are no transaction costs if you have USDC on Polygon. Onboarding USDC into Polygon might bear costs but they are minimal.
I ended up dodging the bullet of loosing money here, because I was a bit worried that Nate Silvers model might have been behind, because the last poll then was on the 23rd. I was also too busy with other important work to resolve my confusions before the election. My current two best guesses are:
- The French whale did not have an edge,
- The neighbour polling method is a just-so story to spread confusion, but he actually did have an edge
- I don't understand correctly how this neighbour polling method is supposed to work.
In any case, if Polymarket is still legal in 4 years I expect the prediction market on the election to be efficient relative to me and I will not bet on it.
Interesting article. Two questions about prediction markets
- What do you think about betting on Kamala winning the popular vote? It seems like a better bet for expected values. I am unsure if Republicans' distrust of election results increases the betting risk (what if elections are contested?).
- Do you think prediction markets are better than they used to be around 2020?
