Polymarket, a leading predictions market, has reported that bets totaling $9 billion have been placed on whether Donald Trump or Kamala Harris will win the election. Trump currently holds a 63% chance of victory according to Polymarket’s odds.
However, emerging concerns about “wash betting” are raising doubts about the integrity of these predictions.
Analysts at Chaos Labs and Inca Digital suggest that a large portion of these bets may involve wash betting. Wash betting is a technique where traders repeatedly buy and sell assets among themselves to inflate trading volume artificially.
In prediction markets like Polymarket, this practice manipulates odds, potentially steering them toward certain outcomes.
Wash betting is a form of wash trading that has gained traction in digital asset spaces, including crypto.
Instead of trading traditional assets, like stocks and bonds, Polymarket users trade “shares” of an outcome in a specific contest, such as elections or sports event.
While most of these participants aim for straightforward profits by betting on likely outcomes, certain actors with multiple accounts—or even coordinated groups—can conspire to perform “wash trading.”
Their activity creates the illusion of high demand, influencing other bettors and, in some cases, the market odds.
Polymarket operates with USDC, a stablecoin pegged to the U.S. dollar. While USDC’s stable nature is intended to give bettors confidence in maintaining value, it’s not immune to risk.
For example, past stablecoin collapses in the crypto world have sent shockwaves through markets, with multiple crypto firms even filing for bankruptcy.
Although Polymarket maintains that market manipulation is strictly prohibited in its Terms of Use, the company does not automatically detect wash betting.
The on-chain nature of USDC, which operates on Ethereum, is theoretically traceable, allowing analysts and blockchain tools to track transaction flows.
According to Polymarket founder Shayne Coplan, this transparency is “a feature, not a bug.”
Yet, wash betting often happens undetected under the radar, given that multiple accounts and transfers can obscure straightforward tracking efforts.
Chaos Labs recently applied its blockchain analytics tools to investigate Polymarket’s election bets. It reportedly found that up to one-third of the trading volume on the outcome of the 2024 presidential election could be wash trades.
The analysis specifically targeted high-volume trading activity, which is typically indicative of coordinated efforts rather than legitimate bets from individual users. This has led analysts to question whether the predictions market can reliably represent real-world public sentiment on the election outcome.
So far, Chaos Labs has avoided ascribing any specific motives to those engaging in wash betting, pointing out that it’s common in various crypto markets for traders to artificially inflate volume, making the assets appear more liquid than they really are.
If as much as $2.7 billion of the $9 billion staked on the 2024 election is indeed wash trading, the purported 67% odds for Trump’s victory may be unreliable.
Traditional polling offers a more nuanced picture. But traditional polls get it wrong sometimes, too.
For those following election predictions, it may be best to look beyond betting odds.
As analysts and regulatory bodies continue to monitor the prediction markets, its important to not forget that real decisions happen at the polls.
Related: Billionaire Mega Donors Funneling Millions Into the 2024 Election
