Bark-Bark: Saturday Substack Update!

Polymarket Shenanigans

Normally we don’t publish on Saturdays, but this is a news alert. If you’ve been following Polymarket in the election run-up you’ve probably noticed Trump taking a nosedive.

Well, some hanky-panky may be going on. There is allegedly something like $2.7B being bet on the Trump-Harris election results, but news reports from multiple credible sources say some of this may be so-called “wash trading.” This came to light when some blockchain research companies said that the $2.7B trade volume was actually more like $1.7B—in other words, a billion short. In other words, there’s only about $1.7B real money and the rest is just buy-and-sell churn.

“Wash trading” occurs when one party (or maybe a group working together) simply buys and sells bets to generate the false perception of a lot of buying activity. This boosts trade volume and can be reflected in who’s ahead.

So why would anyone do this? What’s the game plan? You would think people betting would want to bet on winners. Well, elections cause people to do weird things. One theory is that a variety of forces want to cast doubt on these betting sites as surrogate polls. In other words, make us doubt them.

But a more plausible theory is that by pumping a lot of money into these betting markets, the voting public might be influenced. For instance, if these sites show Harris is doing well, people may be less inclined to go out and vote for Trump. Furthermore—and no one knows how this really works—these new betting sites might influence things like fundraising or people willing to go out and volunteer for their candidate.

And there is some evidence this is shenanigans. The website Decrypt says that a new Polymarket bettor has just jumped online and posted $2M in bets favoring Harris. Decrypt is a pretty cool site, they even know who this whale is: LY67890. Now this whale did not bet his money all at once. He or she laid down dozens of bets. Six of them were more than $100k but a lot of bets were small amounts. This alone suggests that this is a whale who was up to no good by trying to camouflage himself or herself as a regular fish.

And one more nuance: U.S.-based bettors are technically not allowed to use Polymarket for election wagers, although they can use other betting sites like Kalshi. So all of the bets you see on Polymarket are ostensibily made by people outside of the United States. Since Polymarket is a crypto-only site, it’s hard to know if Americans have not found ways to get on and bet there. But let’s just say Polymarket has a lot of foreign actors betting.

In short: vote (if you haven’t already) and stop watching Polymarket. It turns out that bad actors are finding out how to manipulate it.