Thousands who gambled on the U.S. election are looking forward to a potential payout of about $450 million from online gambling sites after Donald Trump was elected president in a stunning comeback. But some may have to wait to collect their haul.
Online election betting sites exploded into view in the final weeks of the election due to the way former President Trump’s odds on so-called prediction markets sharply diverged from opinion polls, which had the race locked in a dead heat.
Prediction markets can “measure crowd wisdom where no hard data is available,” said Samuel S.-H. Wang, a Princeton University neuroscience professor who is also the director of the Electoral Innovation Lab, which studies elections and electoral reform.
In a triumph over traditional polling, the prediction markets proved more prescient after Trump won the polarized race. Proponents of prediction markets argue they are a far more accurate gauge of the true state of the race, sweeping up a broader view of outcomes and catching, in real time, momentum, media influence, and breaking news that can have seismic impacts on campaigns.
It was also a victory for another proxy of Trump’s election chances, Trump Media and Technology Group, whose shares had soared in tandem with online gambling sites in the lead up to the election. Shares of DJT were up 8% on Wednesday.
The stock has a fervent following of Trump supporters, hundreds of whom who gathered for an election night party on the social media platform Rumble.
The group’s leader, Canadian pastor Chad Nedohin, toggled his screen between Trump Media’s third quarter financials that had just been released, Trump’s surge on Polymarket and the winning election landslide results as they poured in.
Prediction payouts
Two of the largest of the prediction exchanges, crypto-fueled, offshore Polymarket that sells contracts to overseas bettors, and U.S.-based Kalshi, which serves U.S. residents, together ended up with a purse of about $450 million as of Tuesday evening, according to data from the companies. A third site, PredictIt, is an academic research group and does not disclose its payouts.
In total, Kalshi said 28,000 people had made bets on a Kamala Harris win, while 40,000 bet on Trump. Polymarket did not respond to a request for information about how many people had placed bets on its site.
Polymarket, which counts Peter Thiel’s Founders Fund as an investor, allows bettors to keep making wagers until the bet closes out, which occurred once the Associated Press, Fox, and NBC had all called the electoral college for Trump early Wednesday morning. The payout was estimated at $287 million Tuesday evening.
On Kalshi, bettors can keep making wagers until inauguration day on January 20, 2025. Kalshi’s payout pot stood at $159 million Tuesday evening.
Betting on prediction markets is not the same as doing so against a traditional betting house. Rather, shares are created when opposing sides of a bet come to an agreement such that the sum of what each side is willing to pay equals $1.
The Polymarket bettor set for the biggest payout is a Paris-based investor known as the “Polymarket whale,” who made $40 million worth of Trump-related bets on the site. If Trump goes on to win the popular vote, he will walk away with $80 million, according to his accounts on the site.
The trader’s huge Polymarket bets came in tandem with a dramatic rise in Trump’s chances on the exchanges.
—By Michelle Conlin, Reuters