In the run-up to the 2024 US presidential election, Donald Trump cited political prediction markets (PPMs) as evidence that he would defeat Kamala Harris and return to the White House: “A gambling poll, as they call it . . . I don’t know what the hell it means, but it means that we’re doing pretty well.” PPMs are not exactly a “gambling poll.” Rather, they are digital platforms that offer contracts on which traders wager money on the outcomes of upcoming political events, with contract prices functioning as implied odds for each outcome.
At the time of Trump’s statement, PPMs were newly liberalized. From 1988 to 2024, the Commodity Futures Trading Commission (CFTC) restricted the size of these markets and required PPMs to partner with universities. Two months before the election, the US District Court for the District of Columbia ruled that the CFTC was not authorized to block the development of large-scale, for-profit PPMs, and the maximum bet that Americans could legally make in PPMs jumped from $850 to $7,000,000. Although Trump did not know “what the hell” PPMs were in 2024, he is now enmeshed in them: the Trump-owned social media site Truth Social is partnering with Crypto.com to host PPMs, and Donald Trump Jr works with the two biggest prediction market firms, Kalshi and Polymarket. Additionally, concerns about insider trading in PPMs, like suspicious betting patterns right before the capture of Venezuelan president Nicolás Maduro, bog the administration and CFTC.
Advocates of PPMs — like the CEO of Polymarket, Shayne Coplan, during a recent 60 Minutes interview — argue that PPMs should be liberalized because PPMs reveal “the wisdom of the crowds” and therefore generate the best forecasts of the future. However, the wisdom-of-the-crowds theory mischaracterizes how PPMs actually function and, as a result, offers a poor justification for the liberalization of PPMs.
The wisdom-of-the-crowds thesis is rooted in an essay written by…
Auteur: Rafferty Thompson
