US Election Results a Validation on Prediction Markets, Crypto Experts Say

Was it a stroke of luck or an industry-defining triumph?

That’s the question that statisticians and pollsters are left with following Donald Trump’s White House victory, envisioned by traders weighing in through prediction markets like Kalshi and Polymarket. 

Of course, the Crypto Twitter crowd was quick to call it a crystal-ball moment.

“Those ‘prediction market whales’ were more dialed in than the polling experts [that are] paid millions of dollars to predict elections,” Bitcoin evangelist and entrepreneur Anthony Pompliano tweeted Wednesday, addressing the coin-toss outcome envisioned by many in the presidential race.

Predictions over polls

As Election Day came, Kalshi’s platform foresaw a 57% chance that the Republican candidate would win, alongside Trump’s 62% victory odds penciled in by traders on the blockchain-based predictions platform Polymarket. 

That’s despite some of the most recognized election gurus expressing a razor-thin difference between Trump and Vice President Kamala Harris.

In his final forecast for the Silver Bulletin, statistician Nate Silver found that Harris had won 50.015% of the time across 80,000 simulations. Last month, Silver, who is also a Polymarket advisor, expressed that his “gut” was telling Trump would win, however.

For Polymarket, the 2024 race has been a high-stakes test, placing the platform under scrutiny as its odds steadily crept into the mainstream. At the end of the day, the company prided itself as a source of information over polls, media, and pundits.

“We are proud to have delivered high quality, transparent data to everyone across the globe,” Polymarket tweeted Wednesday.” We are just at the beginning of building a generational platform that demystifies the events that matter most to people around the world.”

Disrupting the mainstream

Bitwise Senior Investment Strategist Juan Leon told Decrypt the election outcome only validated Polymarket’s business model. Disrupting the way that the public assesses current events, he signaled that a market-based approach to truth worked this time around.

“Prediction markets were right. Polls were dead wrong,” he said in a statement. “Trust the wisdom of the crowds that have skin in the game.”

For the third time since 2016, Trump outperformed the polls, lifting Republicans to their best performance since he entered the political realm, per Real Clear Polling. The non-partisan media outlet reported Wednesday that Trump was underestimated in key swing states.

At the same time, other publications, such as Yahoo News, reported the polls “mostly got it right.” With a close race projected to come down to battlegrounds like Pennsylvania, Wisconsin, and Michigan, there were no surprises as to what states were ultimately in play on Election Day.

According to Haseeb Qureshi, a managing partner at the venture capital firm Dragonfly, Polymarket was more accurate on the election’s forecast than poll-based models while also calling the election before any media publication was able to do so with confidence.

On Twitter, Qureshi, who disclosed that he is an investor in Polymarket, wrote that mainstream media outlets had dismissed Polymarket’s odds “because it’s a bunch of Trump-loving crypto bros” and that the platform is officially off-limits for U.S. citizens.

The difference between Polymarket’s odds and poll-based projections wasn’t that far off from each other, Qureshi added. In pricing favorable odds for Trump, he emphasized that “the market knows what the polls and analysts are saying,” and Polymarket disagreed.

On Wednesday morning, the Associated Press declared Trump had won the election at 5:34 a.m. ET, per PBS News. At that point, prediction markets like Polymarket and Kalshi had Trump’s victory odds hovering close to 99%, suggesting the race effectively had been settled.

Mike Cahill, CEO of Douro Labs, a blockchain infrastructure company, told Decrypt in a statement that Polymarket let people put their money where their mouth was in an unprecedented way. It also shined a light on crypto’s disruptive potential, he added.

“Last night’s election signified that prediction markets are a way for people to be heard,” he said. “What we’re seeing now is the beginning of a revolution in how blockchain technology is giving a voice to individuals who don’t typically have a platform.”

While prediction platforms entered the 2024 race as a growing means of speculation, they could be leaving it with a newfound aura of interest and accuracy. 

As far as winners go, Trump wasn’t the only one.

Edited by Sebastian Sinclair