TLDR
- Prediction markets like Polymarket showed Trump as favorite before election, proving more accurate than traditional polls
- Markets gave Trump ~60% chance of winning 24 hours before election, rising to 98.8% on election night
- Mainstream media had previously accused Polymarket of pro-Trump manipulation
- By early Wednesday, even NYT gave Trump >95% chance of victory with projected 306 electoral votes
- Polymarket has seen billions in trading volume in 2024, operating on crypto infrastructure
Election prediction markets demonstrated their forecasting power Tuesday night as Donald Trump secured a strong showing in the 2024 presidential election, validating betting platforms like Polymarket that had consistently shown him as the favorite despite contrary polling data.
Throughout the late summer and fall months, traditional polls gave Democratic nominee Kamala Harris a slight edge, often within the margin of error.
However, cryptocurrency-based prediction market Polymarket told a different story, maintaining Trump’s position as the frontrunner.
By early Wednesday morning, Trump’s odds of victory on Polymarket had surged to 98.8%, up dramatically from around 60% just 24 hours earlier.
The platform’s accuracy came despite recent criticism from mainstream media outlets, which had suggested pro-Trump forces were manipulating the markets to artificially inflate his chances.
The New York Times’ election forecast needle aligned with the prediction markets by 1:25 a.m. ET Wednesday, giving Trump greater than 95% probability of victory.
Their projections showed Trump securing 306 electoral votes, well above the 270 required to win the presidency.
Polymarket, which operates using blockchain technology, has processed billions of dollars in trading volume during 2024.
The platform allows users to place bets on various political and real-world outcomes, with market prices reflecting the collective assessment of event probabilities.
Koleman Strumpf, an economics professor at Wake Forest University, praised the performance of prediction markets in forecasting the election outcome.
“The markets were far and away the best forecast of the 2024 election,” he noted. “While pollsters said ‘too close to call’ or Harris is favored, markets identified Trump as the favorite.”
The platform’s success has drawn attention to the potential advantages of prediction markets over traditional polling methods. When people put real money behind their predictions, they tend to bet based on careful analysis rather than personal preferences or biases.
Hart Lambur, co-founder of UMA Protocol, which provides technical infrastructure for Polymarket, emphasized the straightforward nature of the markets’ success.
“Prediction markets work,” he stated. “Polymarket literally ‘predicted’ that Trump was most likely to win, when traditional polls said the race was a toss-up.”
However, some experts caution against drawing sweeping conclusions from a single election cycle. Aaron Brogan, a lawyer studying prediction markets, suggested that more data is needed to fully validate their reliability.
“This outcome is consistent with both the prediction market accuracy and an unremarkable polling error modestly biasing traditional polling aggregates,” he said.
The platform has seen particularly intense activity during election day, with traders responding rapidly to incoming results and exit polls.
The binary nature of these markets – where outcomes are either correct or incorrect – creates a dynamic trading environment that quickly incorporates new information.
Dragonfly managing partner Haseeb Qureshi noted that both traditional polls and prediction markets serve valuable purposes.
“The lesson is that markets are great and forecasts are an input to those markets,” he explained. “Both are valuable, and in this case they didn’t disagree by much.”
By election night, none of the concerns about prediction markets potentially harming democratic processes had materialized.
“None of the hysterical claims about how markets would damage democracy or other woes came to pass,” Professor Strumpf observed.
As of early Wednesday morning, while the Associated Press had not yet officially called the race, the market prices on Polymarket clearly reflected the emerging consensus about Trump’s victory.
The platform’s successful prediction adds weight to arguments for incorporating market-based forecasting tools alongside traditional polling methods.
The 2024 election has highlighted the potential value of prediction markets in providing additional insights into electoral outcomes.
While these platforms may not replace conventional polling entirely, their performance suggests they deserve serious consideration as complementary forecasting tools.
