As prediction markets provide contracts in an increasing number of areas, are they beginning to encroach on the position that opinion polls at present serve in politics?
Pre-election polls are sometimes referenced within the build-up to main elections, providing a taste of the outcomes that is likely to be on the best way. Nonetheless, each political commentator will likely be fast to say they aren’t predictions – and certainly they’re typically proved mistaken when the outcomes truly roll in.
In each the 2016 and 2020 US presidential elections, polls underestimated the assist for Donald Trump in key battleground states. Whereas there was some enchancment in accuracy within the 2024 election, with most main polls estimating that it might be an in depth run between Kamala Harris and Trump, the bulk have been leaning extra in direction of Harris than Trump.
Enter: prediction markets
By comparability, prediction markets that have been providing political contracts within the run-up to the election have been providing extra correct odds. For instance, Polymarket provided 60/40 odds on the Trump/Harris voting cut up, which, whereas overstating Trump’s Widespread Vote margin, was impressively shut in terms of the Electoral School outcome.
Trump's odds are up 2.5% after Kamala Harris' Fox Information interview.
He now has a 24% lead. pic.twitter.com/7YFOFzwrfu
— Polymarket (@Polymarket) October 17, 2024
Might prediction markets subsequently present a extra correct snapshot of public temper and intentions? Prediction markets like Polymarket definitely do have to base their knowledge and odds on a wealth of data to make sure accuracy and tempting bets – however that doesn’t imply they’re infallible.
“If something, we’ve cause to imagine that contributors in prediction markets are considerably atypical as, for instance, all of them would appear to take pleasure in at the least this one type of playing.” Michael Montgomery, political scientist and former US diplomat
“The brief reply is perhaps sure, perhaps no,” Michael Montgomery, political scientist and former US diplomat, informed Readwrite.
“Members in prediction markets are fully self-selected. In consequence, we’ve no cause to imagine they represent an enough pattern of any bigger group – comparable to voters – for which we’d wish to make nuanced predictions of future conduct.”
Followers of prediction markets typically argue that incentives, liquidity, and the “knowledge of crowds” assist them outperform conventional polls. When folks have cash at stake, they have an inclination to pay nearer consideration, react shortly to new info, and proper unhealthy assumptions.
In energetic markets, all these particular person judgments get distilled right into a single value reflecting the group’s collective expectation. It’s not foolproof, but it surely helps clarify why prediction markets typically edge out polls.
For opinion polls, however, pollsters for presidential elections, as one instance, take deliberate care to ballot a variety of adults inside voting age, spanning totally different areas of the nation. The objective is to supply knowledge from a different cross-section of the nation. The identical can’t really be mentioned for prediction markets.
“If something, we’ve cause to imagine that contributors in prediction markets are considerably atypical as, for instance, all of them would appear to take pleasure in at the least this one type of playing,” famous Montgomery. “A minimum of from a basic social science perspective, prediction markets don’t appear to have a lot to suggest them.”
Analysis evaluating prediction markets and political polls exhibits that each have a tendency to maneuver in the identical path, however markets usually react quicker to new info. The examine from a scholar on the College of Arizona discovered that prediction markets adjusted instantly to debates and first outcomes, whereas polls, that are up to date extra slowly and formed by query wording and sampling choices, took longer to mirror these shifts.
Each strategies in the end recognized the winner of the 2020 Democratic nomination, although prediction markets did so earlier and by bigger margins. The examine additionally notes that markets carry their very own quirks, comparable to merchants clustering round sure “reference costs,” which might distort accuracy. In apply, polls provided structured snapshots of voter sentiment, whereas prediction markets acted as real-time aggregators of scattered perception, giving every a distinct position in political forecasting.
Potential for abuse
A current instance of a playful remark from Coinbase CEO Brian Armstrong uncovered one other situation: the potential to abuse prediction markets by the gamers the contracts middle on. Armstrong made a quip about prediction markets taking bets on what phrases he would say through the firm’s quarterly earnings name, earlier than shortly rattling them off.
Whereas the remark was clearly made in enjoyable, it did present how simple it might be to control prediction markets outcomes. If a CEO may do it, couldn’t a significant political participant too?
The Crown Prince of Saudi Arabia simply referenced the polymarket about him sporting a go well with & tie.
Simulation confirmed?pic.twitter.com/jPHJpDkzXK
— Polymarket (@Polymarket) November 19, 2025
Low-liquidity prediction markets are additionally a lot simpler to sway. If it takes solely a small sum of money to maneuver costs, one well-timed commerce or perhaps a pointed public remark from a political determine can nudge the chances in a sure path. In these moments, the market isn’t actually exhibiting what folks imagine will occur. It’s exhibiting what just a few motivated gamers need it to appear to be.
You’d hope that the stakes of a US presidential election could be sufficient to not encourage candidates to control the outcomes simply to win a prediction market contract, but it surely’s possible that smaller elections may tempt folks to drag out of races or in any other case manipulate outcomes for monetary acquire.
The place prediction markets match alongside conventional political polls
That’s to not say that there’s no house for prediction markets to play a job transferring ahead, nonetheless. Media retailers more and more cite market odds to indicate public opinion, and the accuracy of Polymarket’s odds forward of the 2025 US presidential election means that there are some ways in which prediction markets can succeed the place opinion polls don’t.
“What we could also be seeing is prediction markets functioning within the method of an off-the-cuff ‘massive knowledge’ software that aggregates the predictions of tens of 1000’s of observers with totally different views and strategies after which spits out a single prediction,” defined Montgomery.
Put merely, political commentators and onlookers can’t use prediction markets to definitively predict election outcomes – however the identical might be mentioned for opinion polls. As an alternative, maybe there’s a future the place each instruments can be utilized for insightful evaluation within the run-up to main elections.
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The submit Might prediction markets substitute political polls? ‘Possibly sure, perhaps no’ appeared first on ReadWrite.
