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Culture War Roundup for the week of October 14, 2024

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More prediction markets stuff.

On /r/slatestarcodex there's actually a decent discussion of the prediction markets weirdness we've been seeing. It does turn out that there was probably a whale who bought enough Trump shares to increase the price from 50 to 60 over a number of days.

But, far from being an attempt at manipulation, this is actually a savvy trader who saw that the new Trump poll numbers had not yet been reflected in the election odds and took advantage of that. In the days since, Trump's Polymarket odds have crystalized at around 60% as traders have digested the new consensus. But if this was manipulation, it would require a constant influx of new capital to maintain the price of 60.

So what would manipulation look like?

Well, we actually saw it last night, when the price of Trump shares had a flash crash to 55 before quickly recovering to 60. This movement has all the hallmarks of manipulation.

  1. It took place during the wee hours of Sunday morning, the lowest liquidity time of the week

  2. The price immediately rebounded back to 60 as traders took advantage of the mispricing

  3. Odds for individual states did NOT shift in concert with Harris's national odds

My guess is that someone in the vein of Reid Hoffman bought the manipulation story enough to try a counter-manipulation of their own, rapidly lost a few hundred thousand dollars and then bailed.

Takeaway: Polymarket is more robust than many people gave it credit for.

Polymarket is not legal to trade for USAians. Do we follow it for sport, or do we have "other methods" of participating?

Use crypto, they physically can't stop you.

They can't stop you, as is the case with most laws, but they can punish you afterwards.