Original source: Haseeb, Deep Tide
Reposted: Koala, Mars Finance
As the dust settled on the election, there was a story that (The Wall Street Journal) and (The New York Times) did not report. While mainstream media was busy with the spectacle on TV and hesitating to predict the results of key swing states, the world's largest prediction market, Polymarket, had already made a judgment before midnight Eastern Time, claiming the probability of Trump's victory was 97%. This was even before the media announced any results from swing states.
1. Throughout the election process, Polymarket was always one step ahead.
I want to explain why this is the case, as based on the feedback I received on Twitter last night, most people have a deep misunderstanding about it.
Polymarket does better than the media in two fundamental ways.
Firstly, Polymarket's predictions before the election were more accurate. Let's look at the polling organizations and analysts. The election models based on polls claimed the race was a 50/50 situation, while Polymarket gave Trump a clear advantage—before the election started, his winning probability was set at about 62%.
If you remember, mainstream media mocked Polymarket for its differing opinions. They felt Polymarket should align with the views of those model makers! Clearly, this difference meant Polymarket was not trustworthy. They believed that the different pricing on Polymarket was due to many pro-Trump cryptocurrency enthusiasts within its user base. It is backed by Peter Thiel, and only foreigners trade on it. Due to being unregulated, they assumed it must be manipulated, with big money pushing up Trump's price. Such criticisms are rampant.
This criticism carries a profound distrust of the market. As if the market cannot be trusted unless there is clear evidence proving its reliability. Of course, if you really trust the market, you might not trust the media anymore. The media's business model is built on making you distrust other sources of information—otherwise, why would you keep clicking on their endless clickbait articles?
But anyone with market experience knows: the composition of the market does not matter, whether it consists of Republicans, Democrats, foreigners, or others. In fact, we know that JP Morgan used Polymarket, and some of the largest hedge funds in the world are also using it (most have non-U.S. subsidiaries). It is integrated into Bloomberg Terminal and cited on CNN. However, when the media talks about Polymarket, it's as if it’s just a platform similar to 4chan.
You need to know that Polymarket had a trading volume of $3.6 billion in the presidential election. This is the largest trading volume for any election betting market in history, surpassing any other election market by an order of magnitude. In comparison, this is far more significant than the career prospects of any single prediction model maker. The market is effective because too many interests rely on the correct answer.
The so-called biases—such as pro-Trump cryptocurrency enthusiasts or non-Americans—did not affect the accuracy of the market. (In hindsight, non-Americans might be better at predicting election results with more calmness.)
But the identity of the participants does not matter. Prediction markets aggregate information from numerous different participants to derive prices that transcend biases. The market does not care about ideology; it only cares whether the outcome is correct.
The fact is, Polymarket is more accurate than any polling organization or model maker.
Now, I want to clarify: the difference between 60/40 and 50/50 sounds large, but it really isn't. The election itself is full of uncertainties. According to high school statistics, if you want to determine whether a coin is biased towards 60/40 instead of 50/50, you need to conduct more than 100 coin toss experiments to have 90% confidence. The outcome of 'Trump winning this election' does not indicate whether the coin is 60/40 or 50/50.
What I want to express is not that Polymarket is completely correct and the prediction models are completely wrong. In fact, the difference between them is not large. I want to emphasize that the market has consistently set Trump's winning probability higher than the polling results. It should be noted that the market is aware of the conclusions of the polls and analysts. The market integrates all existing information, but Polymarket's pricing differs from that of the polling organizations. The only explanation analysts can think of is that Polymarket has a bias.
They lack the humility to consider that perhaps Polymarket might have captured some information that the polls failed to.
The accuracy of polls has greatly diminished. This is now very clear. Before the internet became widespread, the accuracy of polls was much higher. Back then, response rates for landline polls often exceeded 60%. Nowadays, that figure is only about 5%. This means polling organizations face significant sampling bias that cannot be corrected by simple statistical adjustments. (Moreover, polling organizations—as sellers of products and needing to maintain their own reputation—often converge their predictions to avoid being outliers, which affects the aggregation of poll results.)
Additionally, Trump is a unique and divisive figure in American politics. Therefore, in three consecutive elections, we have seen polls severely underestimate the support for him, which is known as the 'shy Trump voter' effect.
Polymarket may believe that polls missed some important information. Polling organizations assert that they have updated their models and made adjustments. Polymarket's response is: I don't believe it. And it turns out Polymarket was right.
Let me emphasize again! Polymarket does not assert that Trump has a 90% chance of winning. 62% is not an absolute figure because the election itself is full of uncertainties. What confuses me is that the media has shown no curiosity about this difference at all. Perhaps Polymarket knows something we don't? Or maybe there is information we've overlooked that is not reflected in the polls?
It is important to remember that Trump's performance nationwide far exceeded polling expectations, whether in Republican or Democratic states. He won every swing state and even won the popular vote, which most people considered unbelievable.
Do you really have confidence that there is no other way to discover the true sentiments of tens of millions of Americans without relying on those traditional polling organizations and outdated online surveys?
This is what the market teaches us. The market is smart, but it does not explain the reasons—it only shows the results.
2. This leads to the second way Polymarket surpasses the media.
Polymarket predicted the election results in real-time before the media. On election night, the unpredictability of the market was fully revealed. Polymarket reacted quickly and vigorously before any results were announced in swing states. According to Polymarket's judgment, the election was essentially decided by midnight, while mainstream media didn't formally announce the results until 6 a.m. the next day. Why is that?
Firstly, Polymarket identified an important correlation that mainstream media was unwilling to explain to their audience. Polling errors are rarely random; they often have correlations across states. So when traders see Trump significantly outperforming polling expectations in some non-competitive states, like New York City (a typical Democratic state) or Florida (a typical Republican state), it indicates that nationwide polling errors could be substantial.
Polymarket quickly picked up on this, realizing that swing states were no longer competitive. At 11:30 p.m., Polymarket had set Trump's odds in Pennsylvania at 90%, while only a small portion of Pennsylvania's votes had been counted.
Prediction markets do not wait for formalities or commentators' analyses. They do not care whether they break the traditional rituals of waiting for vote counting. Remember the outrage of viewers when Fox News prematurely announced the Arizona results in 2020 (which ultimately proved correct)? Trump even threatened to boycott the channel. This reinforced a lesson—major media must honestly count the votes and not be too clever.
However, the market does not care about the dramatic processes; it only cares about the results. Obviously, explaining to CNN's audience that the election is over, the polling errors in non-competitive states are too large, and Kamala's prospects are bleak, is a very difficult task. This contradicts the narrative that the media has reinforced for months. The public needs simple, easy-to-understand stories where everyone is clear about the story's development—you have to wait for the results from swing states until a certain color bar crosses the 270 vote threshold.
At 12:51 a.m., the New York Times was still showing dramatic charts and headlines. At that point, Polymarket had already set Trump's odds at 98%.
Thus, election observers stayed up all night just to let the media complete its meaningless coloring ceremony.
Polymarket traders are not bound by narratives and have no dramatic motives for ratings—they just give judgments directly.
@shayne_coplan, the founder of Polymarket, stated that Trump's campaign team is paying attention to Polymarket in an attempt to better understand how to interpret the odds. The media even dared to complain that Trump announced victory when the vote count reached 267—at that time, Polymarket's odds had already dropped to show 100%.
The charm of the market lies in its ability to quickly respond to new information. The traders who can integrate information the fastest will be rewarded—with profits. This is something traditional media cannot do because they need to process events through multiple layers of explanation, narrative construction, and internal politics (like Murdoch's intervention in the 2020 Arizona results).
Polymarket's decentralized nature bypassed all these formalities, allowing information to flow freely and unhindered.
Last night's events are worth reflecting on. This election is a strong warning to the Democratic Party, a denial of the expert class, and an immune response to the arrogant media.
However, for Polymarket, that night was a perfect testament to its value. The lesson for me is: when there are important events happening in the world, it's better to skip those column articles and directly check Polymarket's odds. Let me state: I am an investor in Polymarket. I have always been passionate about prediction markets, and now their value is finally recognized, which makes me very pleased. Additionally, since I am very tired right now, I might have some inaccuracies in the details, but you should understand my point.