Cash News
“Polymarket is officially becoming the internet’s source of truth. It’s the new news,” Shayne Coplan, the site’s 26-year-old chief executive, tweeted after Vance was confirmed.
The company has secured $70m in funding from investors such as Peter Thiel, the Trump-supporting libertarian tech investor, and Vitalik Buterin, the cryptocurrency pioneer. It has also signed up Nate Silver, the election-forecasting guru, as an adviser.
The backers of prediction markets say they are not merely seeking to incentivise gambling. They believe that financially-backed predictions can serve as a form of truth about the future; a crystal ball of sorts.
If we had better forecasts about the future, the idea goes, we would all make better decisions: whether to quit our jobs if a recession was likely, or whether to buy a house near a new rail line if there is little chance it actually gets built.
Proponents have even proposed a form of government, Futarchy, in which financially motivated parties bet on which policies will successfully realise the will of the people, with the market in turn influencing what the government implements.
Leighton Vaughan Williams, an economist at Nottingham Business School who has studied prediction markets in depth, says they have their problems. Like all markets, they are open to manipulation: a campaign may bet heavily on their own candidate to provide the illusion of momentum, discouraging rivals and securing fundraising.
Earlier this month, millions of dollars were wagered in an attempt to drive Harris’s odds up on Polymarket, in an attempt to profit from a derivative market, in which people bet on the status of the first market. The move briefly saw the Democrat’s odds spike.
Vaughan Williams says these attempts do not last long, as professional investors sweep in. “If [manipulators] create a mispriced market then the big, professional money comes in and mops it up.”
However, the practice has led to concerns that prediction markets could interfere with the democratic process.
“[Prediction markets] could harm public perception of election integrity and undermine confidence in elections,” the US Commodities and Futures Trading Commission argued this year, in response to an attempt to legalise the contracts.