Is a new whale on Polymarket skewing odds?

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Banned gambling platform prone to manipulation? You don’t say.

I’ve said it before and I’ll say it again: US persons are banned from Polymarket.

Per a 2022 settlement with the CFTC, Polymarket is required to block US users.

Obviously, we know this hasn’t stopped people from circumventing the rules (and writing how-to’s to help others do the same). But still, I’ve found the widespread acceptance of Polymarket odds as a proxy for the 2024 presidential election outcome confounding.

Odd Lots co-host Tracy Alloway said it best:

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Latest polls from Emerson College released Friday have Harris leading Trump 49% to 48%. FiveThirtyEight is reporting similar numbers, with Thursday’s numbers showing Harris at 48% and Trump at 46%.

Polymarket is the outlier. On the prediction markets, Trump is in the lead with 60% and Harris trails with 39%.

Of course, Polymarket is not a poll (Elon Musk argues that betting markets are even more accurate because “money is on the line,” plus, we all know what happened in 2016). But the odds having skewed so heavily toward Trump in just a matter of weeks on Polymarket — Harris and Trump were neck-in-neck at the beginning of the month — has raised eyebrows.

Four accounts (Fredi9999, Theo4, PrincessCaro and Michie) have poured $30 million+ into Trump bets in recent weeks. They are mostly betting on Trump winning the presidency, but they are also wagering that he will earn the popular vote. They’ve “pushed Polymarket’s market much higher than anyone is willing to bet it down,” fellow prediction marketplace Manifold Markets wrote in a Thursday blog post.

It’s worth noting that Polymarket bettors have, historically, called some things correctly. They predicted that Biden would win in 2020, and over the summer also accurately predicted that he’d drop out of the race. Markets have also been right about Supreme Court decisions, including the ruling earlier this month that upheld Texas abortion laws.

Kalshi, a US-based prediction market, earlier this month won its appeal against the CFTC and legally re-opened betting on Congressional race outcomes to US users. Presidential election bets are still prohibited on the platform.

Even after Kalshi’s court win, Polymarket remained elusive. The company declined to comment on the ruling and/or share any plans (or lack thereof) to try to re-enter the US legally.

This wasn’t a huge shock though, considering Polymarket got a not-so-favorable shoutout in the Kalshi appeals ruling: “Whether Polymarket has complied with the latter limitation is in question,” Judge Patricia Millett wrote in her opinion. (“Latter limitation” here refers to Polymarket’s requirement to block US persons.)

Plus, US “ban” or not, Polymarket is by all accounts wildly successful. Its US presidential election market has surpassed $2 billion in volume to date, according to data from Dune Analytics.

So far in October, volume across the platform has already broken its 30-day record, coming in at $917 million as of Thursday.

Why spend the time and money in the court system to get the greenlight in the US if it doesn’t have to?

1 in 3

The number of Democrats who say “supporting crypto” should be, at minimum, a “medium level” priority for the federal government, according to a new survey from the Digital Chamber of Commerce.

The report also noted that 1 in 4 Republicans believe positive crypto policy should be a “high” or “very high” priority for the White House and Congress.

The study was conducted by XandY from Sept. 12-17 and had a sample size of 1,004 adult US residents.

Appeal in Ripple case moves forward

The SEC last night moved forward with its appeal of the 2023 court decision that largely sided with Ripple, arguing that the court “erroneously” ruled in favor of Ripple on the issue of programmatic sales.

The securities regulator is also asking the court to review the actions of current and former Ripple CEOs Brad Garlinghouse and Chris Larsen. The two “aided and abetted” the programmatic sales and made personal offers and sales of XRP tokens, the SEC wrote in its Form C, filed Thursday evening. Whether or not Ripple violated securities laws by exchanging XRP for “consideration other than cash” must also be reviewed, the filing added.

In 2023, the court ruled partially in favor of the SEC in its December 2020 case against Ripple. Presiding Judge Analisa Torres sided with the SEC and confirmed that the institutional sales of XRP tokens were an unregistered securities offering.

Torres sided with Ripple on the issue of programmatic sales — made to retail investors via cryptocurrency exchanges — stating that these transactions did not violate securities laws. Personal sales from Garlinghouse and Larsen were also in the clear, Torres’s ruling stated.

The appeal is generally what I expected, but the drama is now focused on whether the SEC’s appeal should be tossed on a technicality.

There is some debate about whether or not the SEC missed the deadline to file its Form C.

The filing must be submitted within 14 days of the Notice of Appeal, including weekends and holidays, unless the due date falls on a weekend or holiday. The SEC filed its notice on Oct. 2 (making the deadline Oct. 16), but it was not entered into the docket until Oct. 4 (making the deadline Oct. 18).

Ripple says the SEC’s filing was late. The SEC has not responded. We’ll have to wait and see if Ripple’s team brings it up with the judge and what the court thinks.

Did You Notice

Happy Friday! Economic data this week mostly surprised to the upside, helping to lower expectations that we may see another 50 basis points shaved off rates before the end of the year. Here’s a recap:

• As we wrote about yesterday, initial jobless claims came in lower than expected at 241,000 vs. the anticipated 260,000. Volatility from Hurricanes Helene and Milton seems to be easing, but could continue as rebuilding and clean-up efforts progress, so it’s a figure to keep an eye on. Continuing claims came in just a bit higher than expected at 1.867 million vs. 1.865 million, but broadly, the labor market looks pretty strong.
• In other good news, US retail sales also beat expectations this week, showing a 0.4% month-over-month increase in purchase value from September. This compared to the 0.3% monthly increase analysts predicted, and far better than the 0.1% increase we saw between July and August. Excluding cars and gas, sales across the board increased 0.7% last month. Resilient consumer spending is a positive sign for economic growth, and while Fed rate cut expectations were little moved by Thursday’s report, the figures help cement odds that we just may get a soft landing after all.

Bulletin Board

• Blockchain analytics firm Arkham Intelligence found that Tesla moved $765 million in bitcoin to unknown wallets.
• The S&P 500 is set to close this week in the green, marking the sixth-straight week of gains for the index. Should it close higher, it will mark the longest weekly winning streak of the year so far.
• In a new update from the Trump family crypto endeavor, World Liberty Financial, the presidential hopeful’s family is slated to receive 22.5 billion WLFI tokens, or 22.5% of the total circulating supply.

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