Millions of dollars kept changing hands on Polymarket long after election outcomes were effectively settled. Prediction market boosters often tout these platforms as barometers of public opinion, and Kalshi beat many pollsters in forecasting the 2024 US presidential race. Trading activity can also tell more perplexing stories. Two global election markets on Polymarket's offshore platform generated over $600 million in trading volume, far more than most political markets typically attract. Most of that activity involved contracts tied to long-shot candidates who ultimately did not win.
This summer, Ethiopian Prime Minister Abiy Ahmed's Prosperity Party cruised to victory in federal elections, winning 438 parliamentary seats. The closest competitor won 13. Trading patterns deviated sharply from the norm. Just $173,000 was wagered on Ahmed winning, while more than $41 million was traded on his chief of staff, Shimelis Abdisa, becoming the country's next leader. Altogether, volume totaled over $285 million, nearly all on losing candidates. "Nearly all of it—about $284 million—came from pairs of accounts repeatedly buying and selling with each other," says former Polymarket trader Chris Park, now of MSR Decode. Rajiv Sethi, a Barnard College economics professor, called it "obviously some form of volume manipulation."
Polymarket's head of global intelligence and investigations, Shana Bautista, told WIRED the team "immediately flagged this activity, investigated, and blocked the accounts from trading." The company did not respond to questions about why the accounts could trade such volume before action was taken. The Ethiopia market stayed open for 123 days after the election, prompting users to ask, "THIS NOT RESOLVED?" Sethi calls this a "zombie market."
A market on a 2024 Romanian election showed even more dramatic anomalies. After the initial vote was called off over foreign interference fears, Polymarket kept the original market running alongside the new race. Sethi's algorithm flagged nearly all of its volume as suspicious. "99.6 percent of volume in this market for certain weeks has been wash trading," Sethi says. Wash trading, in which accounts trade back and forth to create the illusion of activity, is banned on regulated US exchanges and prohibited on Polymarket.
Source: Ars Technica · Summarized by HeadlinesBriefing