Sunday, July 7, 2024

Profit opportunity in election markets on Polymarket

When you're participating in election markets it's really important to read the full rules that define a market before buying any contracts. I was reminded of that while evaluating Kalshi's market for "How many Trump-Biden debates this year?" The market for "1 debate" is currently at $0.28 for yes, $0.77 for no. That seems like an easy 'yes' bet. They've had 1 already, Biden is 50/50 to not even remain on the ticket, and if he does remain on it, an argument can be made that additional debates aren't really in either candidate's best interest (Biden because he might be embarrassed again, Trump because he wants people to remember Biden's first debate against him). Then I ready the rules. It turns out that this market is actually on total number of presidential debates between the Republican candidate and Democratic candidate. No mention of Trump or Biden specifically. So it's lot easier to see a scenario where Biden gets replaced on the ticket, and Trump debates Biden's replacement. While some people may argue that at that point, Biden is no longer the democratic candidate, and therefore the first debate shouldn't count towards the total, I assume that the market will be resolved with that debate counting, greatly increasing the chance of there being at least two debates.