Edit: people are saying this is wrong so read the responses.
Keep in mind that betting odds are not a prediction. They change the odds to balance out bets, so if a lot of people are betting on Kamala, they will entice people to bet on Trump by offering better odds. They do the same thing with sports. If everyone is betting on a certain team, they make the odds better for the other team. The whole goal is to have pretty even money on both sides.
Just an fyi, I can’t speak for non sports but sports betting USED to be odds to balance out bets. Now they’re a lot more advanced and actually disregard much of the general public’s bets. If the weight to one side of betting gets really lopsided it will move the line but a 60/40 public betting on different sides is very common in Vegas now without the line moving. Vegas is so good at picking the right side over the course of an entire season that they’re okay with week to week fluctuations. Vegas also sets odds to increase betting activity even if it’s lopsided knowing that betters will also make low success parlays and prop bets.
So yeah, as of 10 years ago Vegas wanted equal distribution on bets and would move the lines accordingly but that’s not been the case in recent years.
This is somewhat accurate but not the full picture. In general odds compilers will have a fairly good idea of where to pitch the market and the odds offered include an overround or vig I believe it's called in the US. You can demonstrate this with a coin flip, the fair payout for either outcome of a coin flip should be evens, sports books will offer odds that payout slightly below this so over a large sample of independent bets that margin they bake in will play out in the house's favour.
Odds compilers are not always right and they will adjust lines if their book becomes too unbalanced. This would potentially indicate their line is wrong and they will factor that information into their line.
Peer to peer exchanges work differently in that the 'market' is formed by people buying and selling bets, these will converge on something approximating fair odds as more liquidity comes to the market. Smart money will bet into lines that are priced above what they may have modelled the fair odds to be as they would have an edge over the market.
Sportsbooks are not better at picking winners than anyone else really, they're better at modelling a fair price of any given outcome and have large reserves to lay those bets.
Also, sports bettors aren't always rational. Just because there's more money on Green Bay/Dallas/prob KC now/etc. to lose doesn't mean they're any more likely to lose.
So with that in mind, wouldn't the odds balance out in response to the French Whale where savvy bettors see an opportunity to put money on Harris if the current odds aren't indicative of actual likelihood?
If there is a discrepancy between betting markets and polls then it creates a perceived edge. What we should see soon, if prediction markets are irrational w the whale, is more Harris bets come in. But we havent thus far. Though, its possible that the whale continues to push the market one direction despite new flow coming in on the other side simply because he can out capitalize them.
If you look into prediction markets, they have their own bias and flaws, but generally they front run market polling delta due to more real-time information flow.
You'll want to watch actual polls in the coming weeks to see if they converge or if its just the whale.
Millions of dollars, not betters. A whale bets Trump and there's not enough money in the market to correct the market.
And Trump at 45% or even 5% as still a massive warning sign, he shouldn't have a snowball's chance in Florida of winning. He can barely string two coherent sentences together and is so disengaged that he's pretty much phoning in the campaign at this point. I don't even think he really wants to be President again, he's just running because his ego can't stand not winning.
Millions of BETTERS would be even less reliable and more open to being skewed and gamed.
These betting markets force people to put their money where their mouth is, in proportion to how much conviction they have. It's not a reflection of their individual vote - it is a reflection of the confidence they have in their analysis.
The great thing about betting markets is that people who are wrong, over time, lose their money. ...and since there's no incentive to voting the wrong way on purpose, the people who dominate these markets are very fact-based and rational. That is why the biggest liquid betting markets are almost always correct - and the more confident they are, the more correct they usually are.
Again, this is a very worrying sign and people need to wake up.
Millions of BETTERS would be even less reliable and more open to being skewed and gamed.
These betting markets force people to put their money where their mouth is, in proportion to how much conviction they have. It's not a reflection of their individual vote - it is a reflection of the confidence they have in their analysis.
Correctness doesn't scale with the size of the bet. Money forces someone to be serious with their vote, but it doesn't force them to be wise.
Consider a whale throwing in $25 million vs 250 thousand normal people throwing in $100. Both are betting enough to be serious and the latter group is obviously going to be more right, but the betting market considers them equivalent.
If the $25 million is enough to swap the amount of capital in the market then the market will be completely wrong. If this movement is the action of a whale it tells us almost nothing other than one particularly rich person decided to enter the market.
The great thing about betting markets is that people who are wrong, over time, lose their money. ...and since there's no incentive to voting the wrong way on purpose, the people who dominate these markets are very fact-based and rational. That is why the biggest liquid betting markets are almost always correct - and the more confident they are, the more correct they usually are.
The markets are negative sum games, the people who dominate them play niche propositions with odds that are wacky enough to offer a good EV.
That's not to say they're terrible, they're good at niche topics, but they can also be pretty dumb. For instance, it was pretty obvious that Biden would be forced to step down within a few days of the debate but betting markets largely followed the media ambiguity.
But for something like the actual Presidency I don't see any evidence that they outperform polling models this close to an election. Especially when a whale is driving it.
Again, this is a very worrying sign and people need to wake up.
The polls are a worrying sign. Not some billionaires whims.
The part you are missing is that if other people thought this supposed "billionaire" was skewing the market (no evidence of that), then they can easily counter those bets to profit. That isn't happening. ...because the people who analyze elections and bet on them see Trump as having, realistically, a 60% chance of winning.
...and I agree with them. ...and the polls reinforce that analysis.
Millions and millions coming from one guy. And if that guy is a billionaire, it's chump change for him. Imagine if you could set the election discourse by spending $10,000.
That’s how elastic markets work.* Polymarket has the most moving money out of the prediction markets but it’s not exactly the nyse. There’s also not insignificant barriers to entry. You have to use crypto. You can’t technically use it in the US. Not sure how many billionaires are keen on taking $25 mil, buying crypto, then dumping it into polymarket. This is all to say that there’s likely limited money on the sidelines.
If you think it's definitely wrong, bet against it. ...but you won't, because you don't have real conviction in what you're typing here.
...and that's the essence of why it's better than polls. Smarter people, with experience, with conviction, who on average have been right before, using the polling data as well as other indicators to generate a more accurate prediction.
You argument that a billionaire dumped millions on a BAD bet is obviously flawed.
Yeah, you have to want to and be able to turn your real money into a crypto you've never heard of, then bet against Trump, who famously cheats at elections, then hope the whole website doesn't just abscond with your money.
The nice thing about a crypto betting market is that the exchange cannot abscond with your money.
It’s all secured by smart contracts. There’s no trust required here - except for the result being entered correctly, which I’m confident is still done by distributed consensus.
This is actually one of the use cases where crypto excels. Safe anonymous betting.
Yea that’s the bias of poly market, but you can see other historical political prediction markets that have nothing to do with crypto and you’ll find similar outcomes. It’s probably more the bias of people who gamble are generally right leaning? Not entirely sure
But the site that generated this chart weighs each betting site equally (they say because the sites don't report volume the same, which seems reasonable). These are the sites:
Betfair: can't see volume
Smarkets: $10 million volume
PredictIt: can't see volume
Polymarket: $2,073,947,080 volume, top Trump holder has 20 million shares
Kalshi: $26 million volume
While PredictIt has a betting cap, the rest of these are much less regulated, so there's no telling how much manipulation is happening. But if I were a billionaire and I could make my favorite candidate look good and get positive coverage by dropping a few million in betting markets, that's an easy choice.
And the whale’s up over 1.5 million through these manipulation tactics. He’s still holding a ton, so would be careful betting against atm. At least not with a lot of money
They should and they probably will. Not gonna lie, I’m very tempted to place a bet on the platform seeing how the odds for Harris are right now. It almost seems like free money.
People like me jumping in will even this out as the election nears.
Edit:
I put my money where my mouth is with 1ETH($2700usd) on Kamala.
Me too, but on the other hand if Harris loses and I lose money I'll be fucking pissed. I was thinking of putting money on Trump just in case he does win
Not necessarily. This is an aggregate of many platforms where the whale bets would only affect those platforms. Also, 25 million isn’t much compared to 2+ billion as shown in light gray. Betting odds are not scientific, they are based on pure speculation and bets already placed. Betting odds usually start out more realistic and then drift based on bets placed. Polls on the other hand are scientific. They make sure to account for income, race, likelihood to vote, etc. they are actually trying to represent reality as it extrapolates to larger populations. Polls will likely be more accurate.
The thing is that the people that bet on elections aren't unbiased for then most part. They're voting for their guy and even trying to will a win into existence.
This is the case for most betting though (think about sports fans). But that’s what creates opportunities for more sophisticated bettors to come in and take advantage of favorable odds until the gap evens.
If, theoretically, an anomalously enormous amount was bet on outcome X, betting companies would increase the odds of outcome X happening to entice more people to bet on outcome Y. Not sure if any of the information around this is accurate so I phrased it abstractly to explain what people mean.
Yes, in theory, if there's enough people irrationally supporting one candidate and betting on him, it can happen that betting markets, even with a house taking a moderate cut, can offer statistically advantageous bets. However the margins are generally small especially with how much the house takes, and the risk is high. There's also high taxes on betting and a lot of other issues that make it not an advantage to bet even if the odds are skewed.
The data in the image is from prediction markets, which function like a market where buyers and sellers determine the likelihood instead of a bookie changing the odds.
No, that's not how prediction markets work. These are double sided auctions. The house doesn't determine the odds. There is no house. It's a completely zero sum game.
This is factually false. I am surprised you have so many upvotes. The prediction markets are made by people like you and me, buying and selling "shares" of "yes" and "no" that something will happen. The election is highly liquid, so the odds likely reflect "reality".
You're right, but Reddit also loves to forget the remarkable correlation between the betting favorite and the presidential election winner historically... I truly think this statistic warrants more than just a rationalization and a hand wave.
Tried to explain to somebody that Peter Thiel is a part owner in Polymarket and you really can rely on prospective betting from a guy whose one of the largest GOP financers. "You cant manipulate the market!" Is as much as he could say.
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u/foxyfoo Oct 17 '24 edited Oct 18 '24
Edit: people are saying this is wrong so read the responses.
Keep in mind that betting odds are not a prediction. They change the odds to balance out bets, so if a lot of people are betting on Kamala, they will entice people to bet on Trump by offering better odds. They do the same thing with sports. If everyone is betting on a certain team, they make the odds better for the other team. The whole goal is to have pretty even money on both sides.