Prediction market Polymarket gained significant traction during the 2024 U.S. election, with $2.7 billion in bets placed on the presidential race between Donald Trump and Kamala Harris.
Source: CoinMetrics
Polymarket was founded in 2020 with backing from Peter Thiel’s Founders Fund and other VCs. They initially tried to build election betting markets in the U.S., but the CFTC shut that down in 2022. Now, they run their operation offshore.
Running on blockchain also distinguishes it from U.S.-based competitors PredictIt and Kalshi. Founder Shayne Copland emphasizes that blockchain integration provides enhanced trading transparency.
Polymarket appears to be a massive success for the Polygon blockchain, gaining significant mainstream attention and organic user growth.
At the same time, blockchain data shows that Polymarket accounts for only 5.2% of transactions on the Polygon PoS chain, as reported by Polygon's research team. Chainlink transactions make up 10.38%, while USDT transfers account for 4.89%.
Breakdown of transactions on Polygon PoS. Polymarket is part of the “others" category, as confirmed by Polygon research (Source: Coindesk)
A wave of media hype has attracted additional investigative attention to Polymarket's crypto design and offshore operations. Recent reports highlight the platform's issues with manipulative trading.
"The accounts all receive very large deposits from Kraken (usually denominated as exactly $500k or $1m deposits), and immediately start betting on Trump everywhere (and only Trump, 0 interest in anything else on the site). Theo received a large deposit, and plowed it into Trump winning the popular vote, sending it from 26% to 39% in a few hours." (Domer on X)
Researchers from Chaos Labs and Inca Digital have also found evidence of extensive market manipulation on Polymarket through wash trading. This practice involves manipulating the market to create fake trading volume and activity. Chaos Labs spotted wash trades making up roughly 33% of volume. Inca Digital's analysis backed this up, noting heavy wash trading activity in their findings.
Such a practice is widespread in crypto apps, particularly those eyeing future token launches and airdrops. Users often earn tokens based on their activity. Polymarket fits this pattern, too, as reports from The Information in September revealed their plans to create their own token. This highlights the experimental nature of a platform many rely on for signals about the presidential election.
Despite these findings, major media outlets continue to cite Polymarket's odds, which currently show Trump as having a 67% chance of victory.
Prediction markets have grown since September's landmark ruling on election betting. Platforms like Kalshi and Robinhood now offer U.S.-based electoral markets. However, Polymarket still dominates the space, largely due to its crypto-native design and offshore operations.
Polymarket is still officially off-limits to U.S. investors. Yet, with the U.S. elections just days away, suspicious activity on Polymarket casts doubt on the site's data reliability.
Mark Cuban, a billionaire who invested in Polymarket, noted in an interview with CNBC that most election market bets come from non-U.S. users. This means the betting odds on the platform do not accurately reflect what American voters think. Overseas betting skews the prediction markets and makes them less reliable as election indicators.
“What’s paradoxical is that the situation on Polymarket is now influencing the real world, where many people believe what they see on the platform. The upcoming US presidential election will serve as a key example for assessing the reliability of prediction markets.” — Alex Momot for Cointelegraph
However, whatever the outcome, so far, the U.S. election as such has served as the strongest bullish catalyst for the crypto market, as prominent macro analyst Ali Martinez has noted:
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