People I know are sharing polymarket predictions about the presidential election, and just reading about how the predictions work sounds like the most capitalism-brained nonsense. Like, try reading this without shaking your head:
On Polymarket, you can buy and sell shares representing future event outcomes (i.e. “Will TikTok be banned in the U.S. this year?”)
Shares in event outcomes are always priced between $0.00 and $1.00 USDC, and every pair of event outcomes (i.e. each pair of “YES” + “NO” shares) is fully collateralized by $1.00 USDC.
Shares are created when opposing sides come to an agreement on odds, such that the sum of what each side is willing to pay is equal to $1.00.
The shares representing the correct, final outcome are paid out $1.00 USDC each upon market resolution.
Unlike sportsbooks, you are not betting against “the house” – the counterparty to each trade is another Polymarket user. As such:
Shares can be sold before the event outcome is known_ (i.e. to lock in profits or cut losses)
There is no “house” to ban you for winning too much.
Thing is, I’m 3 stupid 5 explaining why this stuff sounds off. Am I just doing a liberalism by speaking without investigating more? Is this as BS as it comes off as to me?
I’ve used them for years. It’s just a “put your money where your mouth is” way of polling. Without a cap on how much money a single individual can have in any market (distinct prediction being wagered on), like Polymarket seems to not have, then one person throwing 30M$ into a market and using entirely as a betting book disrupts the purpose of the prediction market as research (which was the basis for their legality in the USA, not sure if that changes but years ago I had to overseas betting sites to bypass the limit on PredictIt, I think it was 1000$ or 1000 shares per market per person).