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Lambert here: Because you knew they would. Not only market manipulation, but election interference.
By Rajiv Sethi, Professor of Economics, Barnard College, Columbia University & External Professor, Santa Fe Institute. Cross posted from Rajiv Sethi’s substack, “Imperfect Information.“
There are now several statistical models and prediction markets generating forecasts for the upcoming presidential election, and they point to a very close race. Harris has the edge in the FiveThirtyEight forecast and on PredictIt, but is behind in the Silver Bulletin forecast and on Polymarket. The Economist has the race essentially tied.
Some political scientists argue that these forecasts are quite meaningless, that it will take decades if not centuries to accumulate enough data to convincingly establish that they are more accurate than naive coin flips. I disagree with this assessment, but it’s certainly true that models and markets both have some serious limitations. Models are built and calibrated based on historical outcomes and run into deep trouble if we enter uncharted waters. And markets are subject to overreaction and manipulation.
There was a spectacular attempt at manipulation on Polymarket yesterday, and you can see evidence of it in the following sharp price movements:
What happened was this. A group of traders bet heavily on Harris and against Trump in an attempt to push her into the lead for a couple of hours. The sums involved were quite large, with one trader alone wagering about 2.5 million dollars. The goal was to ensure that the Harris contract would have the higher price for a majority of minutes during the three hour period between noon and 3pm EST on Friday, in order to profit from a derivative market that referenced prices in the primary market.
Specifically, the market Favorite to win on Polymarket on Friday listed contracts that would pay a dollar if Harris was ahead for a majority of the 180 minutes in the referenced period. These contracts were trading at about three cents at the start of the day, but would rise to above 20 cents at around the beginning of the three hour window:
One trader spent over 11,000 dollars buying these contracts at an average price of 8 cents each, accumulating around 140,000 contracts. Had the attempt at manipulation been successful, there would have been a gain of about 130,000 dollars. This would have been offset by losses in the primary markets, assuming that the prices would have returned to pre-manipulation levels. Even so, it looks like a six-figure profit in a single day on a 2.5 million dollar investment would have been secured.
Despite the fact that the attempt failed, most of the amounts spent in the primary market were recoverable. The would-be manipulators lost a few thousand dollars, but nowhere near the millions that they wagered in executing the plan.
Andrew Gelman argues that such manipulation is tantamount to “interfering with democracy.” And you can see his point, since beliefs about election outcomes can be self-fulfilling. Pessimism about the viability of a candidate results in lower morale, fundraising, volunteer effort, and turnout by supporters, all of which make defeat objectively more likely.
Markets that reference prices in other markets are common in the world of finance of course—all stock options and index futures have this property. But when it comes to electoral prediction markets, I see no rationale for such derivative contracts. They serve no legitimate purpose and open up rather obvious strategies for manipulation. And even if attempts at manipulation fail in the end, they still arouse suspicion and sow confusion.
Derivative contracts of this kind continue to be listed on Polymarket. It would be a good thing if they were discontinued.
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they need to put a contract in place as to the percentage of illegal alien voting in the election – watch the “perceived” percentage participation of illegals to make judgments on the eventual election results
That really isn’t a thing…
https://apnews.com/article/trump-immigrant-voting-noncitizens-elections-explained-cf4c73b336147b5f5d9c2a22b2564994
But the Lord and Saviour DT says it is. We don’t need no stinkin facts
https://www.foxnews.com/politics/trump-tells-congressional-leaders-3-5-million-illegals-cost-him-popular-vote
Mr Playon in all due respect to your citiation from Associated Press:
So the AP claims in “vague generalizations” that illegal alien voting is not a problem – because these people are honest – in NYC – the NYP said last week that 75% of the arrests are now Illegal aliens for crimes like: stealing / rape / assault – (Walgreens / CVS are shutting down due to overwhelming theft in Manhattan, Bronx / Brooklyn) – all of which are crimes just like illegal voting – but somehow these people will respect federal law even when the cant read the law –concerning voting ?
But yet…… other people have issues about illegal voting below: what does this mean to you if illegal voting is not a problem:
Washington: House of Representatives – “The bill also introduces major changes to voter registration through a section titled the Safeguard American Voter Eligibility (SAVE) Act.
It requires individuals to provide proof of U.S. citizenship, such as a passport, birth certificate, or military ID, when registering to vote in federal elections, barring states from processing voter registrations without this documentation. Additionally, the bill requires states to actively remove noncitizens from voter rolls, using databases including the Department of Homeland Security’s SAVE system.
Please provide a link for your NYP claim. There are a lot of bogus rumors on Twitter, so that would not cut it.
Ms Smith per your request:
NYP: Headline: Migrants flooding NYC’s justice system — making up ‘75% of arrests in Midtown’ — as ‘pathetic’ sanctuary city laws handcuff cops
By Larry Celona, Marie Pohl, Carl Campanile, Kevin Sheehan and Chris Nesi
Published Sep. 2, 2024, 7:53 p.m. ET
https://nypost.com/2024/09/02/us-news/migrants-flooding-nycs-justice-system-making-up-75-of-arrests-in-midtown-as-pathetic-sanctuary-city-laws-handcuff-cops/
Thank you very much. Mind you, with respect to NYC, I did consider your factoid to be possible given how many were basically pushed into the city, and then have recently had their housing taken away. When you have a Democratic mayor complaining about the influx, and the immigrants competing with services to the poor and homeless, you know it’s bad. So theft is a logical result, but it’s still important to have evidence of the frequency.
You remember RR- “trust but verify on all issues”. No problem.
As a Born and raised NYorker who left. I’m am drawn (irrationally) to continuously monitor and understand the evolution of the present circumstances (lived for a period @65th between York&1st-you were not that far away- I think for a time). So I like to plot the movement of where the problems are and provide a heads up to family and friends.
I’ve seen no credible evidence that millions of “illegals” vote. It’s a distraction, red herring, and plays into the myth of democracy. Even if it were true, it would make little difference. The topic of immigrants “flooding” NYC is another issue
Sorry to be a grumpy gadfly but: should we be concerned with the “horse race” if we have no functioning democracy, no meaningful choice in the first place? It looks like most “political scientists” assume there are, and they are lost in the forest for the trees in a big way. But their jobs likely depend (like those in the econ dept.) them toeing the line of Junk Political Science. (I prefer to just call it the study of politics, since politics is not science, it is a study of human behavior, so it should be in the psychology dept) As we see here, silly humans are often irrational, yet they fancy themselves as “scientific” and logical. The very existence of this “market” is a great example.
On the other hand, the drama of the “horse race”, the “battleground states” and “swing states” is a source of entertainment, business and betting, as the article highlights. Which horse is most likely to “win”? It also reinforces the underlying assumption that there is meaningful democracy and choice.
Which brand of Genocide will win? The R brand or D brand? What difference will it really make?
Regardless, our system creates despairing & hopeless masses. That said, I prefer “quiet desperation” to violent fascism. Better to be unhappy and have a dwelling, than in the detention or death camps.
Sorry, I don’t understand what you are saying – honestly. Can you explain.
Just another sorry soul who thinks Trump will usher in “violent fascism,” as if that ship hadn’t sailed decades ago. More liberal hand-wringing – see also the “Project 2025” hysteria.
I think justsomeguy05 is saying that he would rather go silently into that dark night then there be an ugly fight before the end. And it sounds a whole lot like giving up.
There might be a way to focus on spirituality and peace and an attempt to transcend these ugly times, but I don’t think he’s referring to that since he chooses “desperation” and being “unhappy”.
Have you looked at the recent homeless stats? Lots of unhappy people on the streets…
There has been plenty of violent fascism under Obama and Biden — Occupy Wall St and recent campus protests were both violently crushed.
And the Repubs are making hay that Walz didn’t crush the BLM protest. Can’t get elected if you can’t crush. That means at least half the electorate prefers fascism in some form or other.
Fascism? What does that mean? People throw around these terms with little understanding what they mean.
BOTH candidates and parties endorse using OUR public resources to GIVE to Israel to commit genocide FFS!
It’s when the broad panoply of types adopt one kind of narrow mindedness. Thus Girard’s undifferentiation,
All these elements mouthing the same simple errant goal gives us no pluralism. The component entities have ended up having no smarts in terms of what are supposed to be their specialties. Just obsess on Russia, Iran, and China, and you’ll be excused for having lost your smarts.
Alright, there’s that. Now someone explain this below (to me). It seems I have some mental blocks re The Street, just like with floating currency valuation.
JJ, I agree. It’s not a functioning democracy. So, what to do?
How about exercising your rights:
The Declaration of Independence: “…Life, Liberty and the pursuit of Happiness…That to secure these rights…whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government…”
Derivative contracts like these should be subject to gambling regulations, as they are bets.
100%
The fact that millions of insouciant citizens will vote in 2024 for either Tweedledee or Tweedledum against their own self interests, is a guarantee the United States of Atrocities (USA) is a washed up failed state headed to the place where Rome went.
The USA will take its vassal states, such as Canuckistan, with it.
They’re droppin’ the puck October 8th. Check it out and then do your penance
Follow the DJT stock ticker, Trump Media & Technology Group Corp. Down 75% to date. His lock up ends in a few weeks so he can cash out, which of course could be a sell signal to his investors.
Aren’t ‘derivatives’ supposed to be regulated, by the FTC?
“Help us Lina Kahn. You are our only hope.”
Alas, the FTC is based in Foggy Bottomly; you will never find a more wretched hive of scum and villainy than Foggy Bottomly. You must be cautious.
The lesson, if there be one here, is that political corruption has graduated from the smoke filled back rooms of the power broker clubs and into the equally fetid dens of the financial robber barons.
One of the eternal comforts of ‘real’ revolutions is that political corruption is, for a bright, shining moment, treated as a Capital Offense.
To continue the financial theme, “Go long guillotines.”
Stay safe. Stack deep.
This seems like a way to test the waters. People with lots of money are obviously likely to be donors. They’re putting in a lot of money and of course they’re being asked for more. It’s an investment you see. But will it pay off? Well, let’s run this little test over here in this derivative markets and see what happens.
Thought experiments: the talking heads who analyze how the debate went themselves invest in the derivatives market for Kamala Harris to be ahead one day after the debate. So now those talking heads are really motivated and get side payoff if they’re successful. Here’s the derivatives market for Kamala Harris for the day after the debate https://polymarket.com/event/favorite-to-win-on-polymarket-one-day-after-debate
It’s interesting to notice how this little shenanigan that they pulled on Friday damaged her chances to win that Tuesday market.
Which brings me back to the other comment of it being a test to see if it’s worth betting on these markets, if people can be swept up into the joy….
This all leaves my head spinning, I think I’ll go for a walk now!
And agreed, this should not be permitted.
“Derivative contracts of this kind continue to be listed on Polymarket. It would be a good thing if they were discontinued.”
If by some wild chance it was a clear sweep by a candidate in some hypothetical election, it seems like admitting that would mess up too many pay days – from the gamblers to the advertising dollars.
Derivatives struck a nerve today. Back to the October 8th theme…if the Panthers lead the B’s 3-2 after two periods, then you get odds on either team to win…or lose…furthermore, you can get odds on whether Pasternak scores a point on the next goal…and like that. Instant on anything, anywhere in the game…bet now. Why would this be a big deal? As our favorite phone operator Ernestine said, ‘No, matter how cynical I get, I just can’t keep up.’