Prediction markets proved themselves this election season. In the weeks leading up to the 2024 presidential election, what appeared to be a small group of traders dumped millions of dollars into Polymarket, betting that Donald Trump would win. It turns out it was just one French whale who had pushed tens of millions of dollars into the market, dramatically increasing Trump’s odds of winning—which he did.
That “prophecy” as many crypto proponents, including Tesla CEO Elon Musk called it, came true late into Tuesday night and early Wednesday morning. By about midnight EST, Trump’s odds of winning the presidential election according to the Polymarket contract, were above 90%. It’s unsurprising the market reacted so quickly—especially since there is money at stake, Luca Prosperi, CEO and cofounder of M^0, a protocol that allows global institutions to issue stablecoins, told Fortune.
The prophecy has been fulfilled! https://t.co/ub1Jt29CjL
— Elon Musk (@elonmusk) November 6, 2024
“While the media have their own reasons to delay or emphasize certain results, traders simply want to make money,” Prosperi said. “It is a bit like what happens in equity markets, where markets rather than research houses and commentaries are the fastest in absorbing new information from events such as earning releases.”
Polymarket also issued a statement on Wednesday touting its “wisdom of markets over the polls, the media, and the pundits.” Its CEO Shayne Coplan said that, allegedly, the Trump campaign headquarters “literally found out they were winning from Polymarket.”
Last night, Polymarket proved the wisdom of markets over the polls, the media, and the pundits.
Polymarket consistently and accurately forecasted outcomes well ahead of all three, demonstrating the power of high volume, deeply liquid prediction markets like those pioneered by…
— Polymarket (@Polymarket) November 6, 2024
How big did the presidential election market get and how much did people make?
Recently, Polymarket had added a provision on its presidential election market suggesting the market might not “resolve” (pay out) until Inauguration Day. But since the Associated Press, Fox, and NBC all called the election for Trump, the market resolved around 11 a.m. EST on Wednesday. The total U.S. presidential contract, or market, had grown to a whopping $3.6 billion.
Although the news outlets called the election before 11 a.m. EST Wednesday, there was a gap between when the market conditions were met and the market resolved. This was because a resolution had to be proposed on Polymarket’s current oracle and resolution source, UMA. Their dispute resolution system allows anyone to challenge a proposed market outcome by posting a bond during a two-hour challenge period, according to Coindesk. UMA token holders can vote to determine the final resolution if it’s disputed.
But now that the market has resolved, it’s time for payday.
Between two betting markets (the presidential election winner and who would win the popular vote), the Trump whale, which traded under usernames Fredi9999, PrincessCaro, Theo4, and Michie, netted about $40 million in profit, according to Polymarket Analytics. Alan Orwick, co-founder of blockchain Quai Network, confirmed to Fortune the French whale stands to gain more than $47 million in payouts from his investments in the Polymarket presidential market.
The way prediction markets work is by allowing traders to buy and sell shares on the outcome of a given event, and the bet is resolved only when the event actually happens. Polymarket users buy shares depending on which outcome they think is more likely. Share prices or “odds” rise and fall depending on demand. So if the event happens the way the trader predicted, the contract or “bet” will rise to $1 and pay out—or fall to $0 if it does not.
While Polymarket users can theoretically cash out at any time based on the current market price, many held on until the bitter end and raked it in. But as Polymarket continues to grow in popularity, there are opportunities for user experience improvement, Orwick said.
“Due to unexpectedly high traffic and demand, some have encountered technical difficulties in processing their claims, highlighting both the platform’s popularity and the need for robust infrastructure to handle such volumes,” he said.
Either way, last night and this morning proved prediction markets are likely to become an integral part of future political events.
“Polymarket changed the political landscape, forever,” Polymarket chief marketing officer Matthew Modabber posted on X. “We’re just getting started.”
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