Polymarkets in Everything
A raid, for show: Polymarket founder and CEO Shayne Coplan, 26, had his Soho apartment raided yesterday morning by the feds.
For the uninitiated, Polymarket is a betting website that accurately predicted the outcome of the presidential election, contra many pollsters. Now, Coplan is the subject of a joint criminal investigation by the FBI and the U.S. Attorney’s Office for the Southern District of New York as to whether he ran the site as an unlicensed commodities exchange.
The feds seized Coplan’s devices, which has led to truly excellent tweets. Hey, if they’re gonna do all this in public, so should he.
new phone, who dis?
— Shayne Coplan ???? (@shayne_coplan) November 13, 2024
But many speculate that Polymarket is getting in trouble not because it did something terribly wrong—indeed, nobody was harmed or defrauded, bettors are all willing adults, who in some cases made out like bandits—but because it disrupts the old way of doing things and embarrasses those in power. “Financial markets are generally pretty efficient, and the evidence suggests that the same is true of prediction markets,” Eric Zitzewitz, economics professor at Dartmouth, told CNN. “There’s no virtue-signaling in an anonymous market when you’re betting.”
Polymarket works by allowing users to buy shares tied to a specific outcome. Each share then trades somewhere between $0 and $1; correct bets pay out a dollar, so you can earn a fair chunk of change (as one French trader did, betting that Donald Trump would win the election). It’s all run peer-to-peer on the blockchain, so there’s no bookie.
“Election betting is a murky legal area in the United States. In 2022, Polymarket agreed to stop offering its services to U.S.-based users after settling with the Commodity Futures Trading Commission for operating without registration. The company paid a $1.4 million fine,” reports The New York Times. But since then, the fact that you can access Polymarket easily with a VPN is an open secret; there are tons of U.S. users, contra what the feds would like.
And that French trader, mentioned above? Many theorized he was trying to manipulate the odds. “How accurate could this platform’s predictive power be if one zealot can go all-in and distort the odds?” asked CNN, to which Coplan countered: “If someone takes a really big position on Trump…there is someone on the other side, a counterparty,” frequently doing the opposite. “When you see the odds on Polymarket, it is not a function of how much money was put on either side, it is a function of market price at that moment,” explained Coplan. “Some trade that someone made two weeks ago doesn’t have bearing on what the market price is right now.”
Polymarket not only called races pretty accurately, successfully crowdsourcing wisdom from those acting in their own self-interest, but also pretty early. A chart of comparisons:
Hours ahead, every time. pic.twitter.com/97BiW58RJw
— Polymarket (@Polymarket) November 6, 2024
The company’s spokesman said the raid on Coplan’s house was “obvious political retribution by the outgoing administration against Polymarket for providing a market that correctly called the 2024 presidential electi
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