President Biden's decision to withdraw as Democratic nominee delivered a massive shake-up to his party and the media coverage of the election—but, for now at least, has done little to change Donald Trump’s electoral chances. The crypto-based prediction market Polymarket on Monday forecast a 65% chance of Trump winning the election, down just 1% prior to Biden stepping down. Mirroring this slight decline, the prediction market PredictIt, has lowered Trump’s odds from 64% as of Saturday, to 60% as of Monday morning.
Research suggests that prediction markets may be a “better forecaster” of political outcomes, on average, and studies have found that aggregators like SciCast and now Metaculus have been consistently accurate on policy questions. For instance, Polymarket priced in a 10% chance of Biden dropping out of the race, even before his infamous debate against Trump in late June.
Polymarket—the world's largest prediction market—is decentralized and built on top of the Ethereum blockchain, and users make bets with stablecoins. It has also earned plenty of social media buzz with the crypto community and beyond. "I've checked Polymarket every single day since the debate. First crypto app that I interact with on a daily basis and hear about in regular conversation with normal friends," one X user posted on Sunday.
Polymarket is the first mainstream crypto app people use without realizing it uses crypto under the hood
— Nick Tomaino (@NTmoney) July 21, 2024
Markets react to Harris taking center stage
Perhaps unsurprisingly, the largest prediction swings relate to vice president Kamala Harris, now the Democratic nominee frontrunner. Polymarket predicts an 81% chance she will be officially appointed, with PredictIt forecasting 85%. The party’s candidate for president will be officially named at the 2024 Democratic national convention in Chicago, which takes place from 19-22 August.
Harris has said she will “earn and win” the nominee rather than be automatically crowned, and a number of prominent Democrats have already announced their endorsement, including Biden, Elizabeth Warren, Alexandria Ocasio-Cortez and the Clintons, to name but a few. Moreover, Harris has already secured the backing of leading Democrat donors. A White House spokesperson told Reuters on Monday that in less than a day since Biden bowed out and endorsed Harris, the campaign has raised nearly $50 million.
Reid Hoffman, LinkedIn’s co-founder who had given more than $8.6 million to endorse the Biden-Harris ticket, wrote on the platform: “Kamala Harris is the right person at the right time.”
While Harris may be the anticipated ticket winner, will she beat Trump? Her odds of becoming the next president have jumped from 18% to 29% on Polymarket, and up from 27% to 40% on PredictIt. FiveThirtyEight’s approval poll show a 50% disapproval rating for the vice president. But, this is 6% better than Biden's, and 3% better than Trump’s.
Who could be the Democrat's VP?
The five front runners to run alongside Harris, according to Polymarket, are: Roy Cooper at 33%, Josh Shaprio at 26%, Mark Kelly and Andy Beshear tied at 15%, and Pete Buttigieg at 6%. Top contender Cooper is North Carolina’s twice-elected Democratic governor. The 67-year-old lawyer has a well-honed reputation as a moderate after 37 years in politics, and has never lost an election.
“If the president decides not to run, I see Kamala Harris and I would hope for Roy Cooper,” former Democratic National Committee chair Howard Dean told CNN on July 18. “I think we would pick up North Carolina as a result.”
But, PredictIt reports a slightly different forecast for the VP pick: Josh Shaprio 30%, Roy Cooper 25%, Mark Kelly 21%, Andy Beshear 19% and Pete Buttigieg at 6%.
Frontrunner Shapiro is the Governor of Pennsylvania, which could prove to be a key advantage, as he would be representing a crucial swing state that Trump has indicated will be central to his campaign’s strategy. As a first-term governor, he has been able to navigate Pennsylvania’s divided government, and could appeal to constituents in the state’s so-called 'purple' suburbs: Philadelphia's swing blue, and Pittsburgh’s swing red.
How do prediction markets work?
Prediction markets, also known as betting markets, are markets where traders exchange contracts that pay based on the outcomes of unknown future events. The prices generated from these contracts are like a collective prediction among market participants. So, the price equates to the odds. For example, Trump shares are trading at 72 cents, denoting a 72% chance he will win.
If the better-trader believes that the true odds of Trump winning the election are greater than 72%, they would buy “Yes” shares for 72 cents each. If Trump wins, each “Yes” share would be worth $1, creating a profit of 28 cents per share. In that outcome, anyone who bought “No” shares, their investment would become worthless. Traders can buy and sell their shares at any point before the outcome, shifting the price of share, and thus, the odds.
