Re:Prediction Markets Beat Polls
by Rebelgecko on Tuesday November 17, 2020 @10:17PM
(#25132809)
I may not have been clear about it in my previous post but for "who will win the popular vote" I'm most incredulous about today's prices, not the ones from election night. Back then there was uncertainty, but now there's no way Trump wins the popular vote unless all of the voter fraud conspiracies are true.
Even if something awful happens and Biden isn't able to take office, he'll still win the popular vote. I think betting size limits are the main issue, combined with people betting against Trump diffusing their bets in correlated markets.
These are basically deep OTM options. In Feb this year, you could call a deep SPY OTM put as delusional; because the speed of the market crash has never happened previously in history and is a 6 to 7 sigma event. These options would have paid out 10,000%; at the best possible times.
There are various possible events in the world which could've caused a popular win victory for Trump. Such as:
* Biden getting COVID and not surviving * Armed warfare or terrorist attack against the United States * other unlikely, but possible events.
There is a premium to insurance paying out when SHTF. There's also high withdrawal fees on PredictIt and betting size limits.
Look at Betfair if you want a better example. Quite rational markets.