Polymarket’s Approach to Resolving Election Bets
The decentralized prediction market platform, Polymarket, has established protocols for determining the outcome of bets regarding the 2024 US Presidential Election, especially in case of contested results. The resolution of the market, which centers around the potential victors Donald Trump and Kamala Harris, is contingent on the declarations of three prominent news outlets: the Associated Press, Fox News, and NBC.
In the event that none of these organizations reach a unanimous decision on the winner by inauguration day, set for January 20, 2025, the market will settle based on who is officially inaugurated as President. This mechanism anticipates scenarios involving disputed or delayed election outcomes, leaving traders’ positions unsettled until a conclusive result is confirmed. However, as noted by Bitget, the market cap of the governance token linked to Polymarket’s UMA oracle system stands at only $244 million, which could expose the markets to risks given the substantial $2.3 billion in volume surrounding the election betting market.
Concerns over Market Manipulation
There are rising concerns regarding the potential manipulation of betting odds within the Polymarket platform. A handful of accounts have reportedly made significant wagers favoring Trump, which Newsweek has highlighted, sparking debates about how these large bets could skew public perception and the integrity of the market, especially during a closely contested election. However, analyst Jim Bianco pointed out that large bets supporting Harris in recent days also shifted market dynamics by as much as 4%.
Additionally, reports from CryptoSlate have documented ongoing substantial betting activities favoring Trump, originating from a few prominent Polymarket users, or ‘whales,’ over the past weeks. Analysis indicates that merely $6 million could significantly impact the market due to its low liquidity in the order book.
Ultimately, Polymarket operates as an open market, and the claims of manipulation appear questionable given that the framework of the market does not indicate any exploitation.
Understanding Market Dynamics
Whether stemming from high-stakes convictions or organized betting, the odds concerning the future US Presidency on Polymarket reflect the natural dynamics of trading facilitated by the platform. Assertions of manipulation in such an open market, devoid of any technical manipulations, are unfounded.
Election Resolution Procedures Amid Disputes
As the election nears, Polymarket’s dependence on media outlets for outcome resolution raises discussions about objectivity and biases. Various media organizations may offer differing predictions, particularly in close races, creating potential delays and uncertainty for traders. The New York Times states that discrepancies could further hinder the platform’s ability to ensure timely resolutions.
The resolution process culminates in identifying “who is inaugurated.” If the selected media outlets do not converge on an agreement by inauguration day, the market winner will be determined by the individual who ultimately assumes the presidency.
In the unlikely event that the endorsement of the president-elect is challenged and results in delays past January 20, the Polymarket results could face further postponement.
Constitutional Considerations
The 20th Amendment to the US Constitution delineates actions to be taken when no president-elect has been established by Inauguration Day. Should the president-elect be unable to qualify, the vice president-elect would assume presidential duties until a new president is qualified. In circumstances where neither is qualified, Congress would step in to guide the next steps, with the Speaker of the House next in line according to the presidential succession laws.
If a contested election results in Speaker of the House Mike Johnson stepping into the role, it could leave many Polymarket traders dissatisfied with their bets.
This scenario, while hypothetical, is underscored by the experience of the 2020 election, where the probability of contesting results was amplified. The likelihood that neither candidate will be confirmed on inauguration day, while slim, has led to the market for election certification on January 6 dipping from 94% to 84% since August.
