A Tourist in Polymarket
A tourist is someone with a passing interest in the subject. Say you day trade biotech small caps for a living and all of a sudden, you want to place a bet on oil futures off an OPEC meeting. That's an easy example of trading tourism... you're taking a little detour from your circle of competency to try something new. You should be a little leary of your confidence factor just from acknowledging that alone. You don't know what you don't know.
Right now I'm currently in a rabbit hole on political betting, something I have very little experience in. I once made a few hundred bucks betting on Obama to win the 2008 election on InTrade--my career in this venture started and ended right there. Anyhow, it all started with a tweet from this guy:
https://x.com/Domahhhh/status/1846597997507092901
I'll summarize for you, a whale bettor might be creating a pricing disparity in Polymarket, on the price of Trump winning the 2024 election and winning the popular vote. Polymarket 'Trump Popular Vote YES' currently trades at 34% while Oddschecker, which aggregates all betting sites, has the same bet at -233, which implies a 30% chance. So there's a 4% premium.
I saw Kamala's odds to win the popular vote at 66% and my half-baked, low-IQ thought was that's a steal of a price. Democrats haven't lost the popular vote since 2004. Hilary lost to Trump in 2016 and still won by 2% in the popular vote.
Then I was thinking--how much should I bet? $50,000? $100,000? I don't have any takes on polling or which candidate is checking the right 'future winner' boxes but I don't know, I just thought 66% was a solid bet. I would have guessed it was priced around 75-80% if I hadn't looked at it.
Then a third thought hit me... a healthy amount of self-doubt. Pete, you're a an absolute tourist. You just saw somethingin a completely new playground and now you want to risk six figures in that? That's crazy.
I had to check my own biases. I started by looking at the open positions of the top all-time performers on Polymarket. I didn't even know that was a thing until today.
JustKen (the guy in the tweet aka Domer and the #2 all-time PnL on Polymarket) was a Kamala Popular Yes person. He has about $40,000 combined in both Kamala Popular YES and Trump Popular NO. He also has some correlated bets, such as Democrat Popular/Electoral YES.
The #1 all-time bettor, TheGuru, has about $50,000 at risk on Kamala Popular YES. But he got in at 54c, which is a price the contract hasn't traded at since early July.
The #3 all-time bettor, YatSen, has roughly $40,000 at risk on Trump Popular NO. He got in at 62c, which is a fade of this current Trump swing.
I won't bore you with the rest. It does seem like the top bettors are leaning on my bias, which is a check in my favor. But looking into it further, it seems these are lighter bets in comparison to the total position values that these heavy hitters are used to. They may also be hedging their bets on another site, a common practice for larger traders.
Another thing I had to do was check my assumptions. Ok Kamala is ahead in the national polls and that should seem to point toward a popular vote victory. But is it being correctly priced in or not? Let's do a very light analysis of prior popular vote victory margins and where national polls were prior to Nov 5th.
2016: Hillary led national polls by 3-4 points and won the popular vote by 2.1%
2020: Biden led national polls by 7-10 points and won the popular vote by 4.5%
2024: Harris currently leads national polls by 2-3 points.
So just knowing that, we know polls overly discount Trump and Harris has an even thinner lead than her predecessors. Harris should be a favorite to win the popular but perhaps not an overwhelming one. Maybe 66 is the correct price. Or another way to look at it if you don't believe in the current short-term Trump swing--70 is the correct price and 66 falls into the category of 'solid value' not quite 'free money'. There is the possibility polls have overcorrected for Trump's prior election performances but without knowing the actual pollsters' methodology changes, I can't confidently rest my hat on that.
So I don't know. I've checked myself a bit and now I'm not sure I should do anything. I have to have a process (and btw, I have none) that leads me to believe Kamala will not just win but CRUSH the popular vote, for me to make a serious bet here. This may be difficult because I already started with a bias and the natural tendency will be to look for confirmation of my priors. If I want to gamble for the sake of gambling, maybe I bet $5,000 on it and mentally categorize it a sports bet for entertainment purposes that might possibly carry a slice of value.
I have a feeling that the serious value will unfold during the night of the election or even after the election. I still remember the swings during the 2020 election--Biden entered the day as a sizeable favorite, it reversed to Trump overnight, and then back to Biden. Traders with a good sense of how tides could turn with the delayed counting of the mail-in vote banked huge. Volatility can become massive opportunities for traders with no bias and solid information. I might save my energy for that. That's if I actually still have any interest in this by that time. Tourism eventually ends and then you have go home.