John Recommends: Positive EV on Polymarket?
Right now it appears that you can get positive EV action on Polymarket, and you may even be able to find opportunities for arbitrage.
Currently the prediction markets for the upcoming U.S. presidential election are somewhat odd. On Metaculus (a play-money prediction market) Kamala Harris is at 54% to win to Donald Trump's 46%
Whereas on Polymarket (a real-money prediction market) the roles are reversed
My initial assumption was that this was just a result of the two websites' respective audiences. Polymarket uses cryptocurrencies, and crypto people (for reasons which are not entirely clear to me) like Donald Trump. However, the two markets were previously tracking together, and it's only recently that a large divergence has happened.
I took a closer look at the positions in Polymarket, and by far the biggest holder is a certain Freddi9999 who owns 14,124,957 shares in Donald Trump Yes.
If we check Freddi9999’s profile we see that they hold positions worth over ten million USD which is all held in markets related to the upcoming elections. They started trading heavily 4 days ago, and have pushed Trump's odds up massively in the past few days. A good analysis of their trading activity can be seen here. Certainly Fredi9999’s activities explain some of the difference in odds.
Free value?
So, currently the prices on Polymarket don't seem to reflect other prediction markets and the general consensus around election odds. If we assume that Freddi9999 is not uniquely insightful, this means that buying shares on Polymarket is currently positive EV. So you should probably buy some. On the other hand, if we assume that Freddi9999 has some sort of material non-public information that explains their actions then actually entering the market may be risky.
Also, 55% is still essentially a coin flip - so actually you should probably steer clear of the whole thing and find some opportunities to do insider trading instead.
Not investment advice