NEW DELHI: When the assembly election results are declared on Monday, at least $26 million — almost Rs 247 crore — will be paid out to those who managed to predict the winners correctly on Polymarket, the American prediction market platform.
The bets opened in December last year and picked up pace as results draw closer. As of Saturday, the pool is almost entirely driven by bets on the Tamil Nadu election outcome. More than $20 million is to be paid out when its results are declared. There is more than $5 million riding on the West Bengal election, almost $400,000 on the Kerala election, $180,000 on the Assam election, and almost $19,000 on the Puducherry election.
What the Odds Predict
For Tamil Nadu, the odds are overwhelmingly in favor of the DMK at 88%. In West Bengal, the Trinamool Congress has a narrow edge with 53% of bets. Kerala sees most money on the Congress party at 75%, which has largely been in the lead except for a few swaps with the CPM since the beginning of April. In Assam, the money is almost entirely on the BJP at 98%, and in Puducherry, almost entirely on the AINRC-led NDA alliance at 86%.
Legal Status and Accessibility
Indian law does not allow prediction markets to operate within India. However, because Polymarket is decentralized and crypto-based, it is technically possible for Indian users to use VPN and crypto to place bets on outcomes. India is the world's largest cryptocurrency user. Earlier this month, Forbes reported that some anonymous Polymarket wallets seemed to be winning unusually often on earnings markets for companies audited by a single global consultancy firm. The wallets had India-coded names like "Kaleenbhaiya" (a character from the series Mirzapur), the report said.
Rise of Prediction Platforms
Prediction markets thrive in the US. Polymarket is just one prediction market. The oldest online prediction market, Iowa Electronic Markets, has been around since 1988. There is the US-regulated Kalshi, the academically rooted PredictIt, and community-created Manifold, among others. The idea is that collective wisdom might capture something that expert analysis cannot, simply because it comes from a pool of people with beliefs strong enough to place money on it. And it is serious money. The biggest all-time winner on Polymarket made profits of $22 million with 18 correct predictions, the largest of which came from a bet on Trump becoming US president that earned them $8.3 million.
Accuracy and Risks
Prediction markets have often been accurate about future events and have been found to be helpful with planning. A store chain in the US, for instance, used prediction market insights to determine everything from demand to when it should open the store. Obviously, they can also go wrong. For example, in 2016, they badly misread Brexit and Donald Trump's victory. Prediction market platforms say that, unlike a betting site, it involves people betting against each other, and not the "house" with fixed odds set by the platform. Regulators say that the difference does not really matter. In India, the same model was called opinion trading, but some of the biggest platforms — Probo, Better Opinions, MPL Opinio, and TradeX — have shut down.
How Polymarket Works
Polymarket operates like a stock market for predictions where the outcome is a clear yes or no. The platform's markets team creates a "market" for the question and sets down rules, including how it will be resolved and when. These are carefully phrased to avoid disputes, with specific deadlines and clarifying grey areas. When there are multiple possibilities, like these assembly elections, Polymarket creates an "event" within which many separate markets, each specific to a possible yes-or-no outcome, operate. For example, "Will BJP win Bengal?" or "Will the DMK win TN?"
Once the market is live, users can buy "Yes" or "No" shares from each other. A single share on Polymarket is priced between $0 and $1, and the price directly represents what the market believes is the probability of that outcome. So, if a "Yes" share on a bet is priced at 75 cents, it means the market believes there is a 75% chance of it happening. People can cash out at any point by selling their shares at whatever the price is at that time. Prices go up and down by the same logic as the stock market, based on how many people are willing to place money on which outcome.
At the predetermined deadline, the market is "resolved." Those with the correct prediction get $1 for each of their shares, and everyone else loses their money. If someone bought their shares at a lower price when the odds were lower, they stand to gain more than someone who bought in when the prices and odds were higher. For instance, one user, "orangexyz," has bought more than 80,000 shares for TVK winning the highest number of seats in Tamil Nadu at a little under 11 cents a share. In a scenario where TVK does indeed end up winning the most seats, the user would make more than nine times their investment. On the other hand, the top holder betting on DMK winning, "Asphaleios," has a little less than 28,000 shares bought at about 87 cents. If DMK ends up getting the most seats, they would make a modest profit of around 15%.
