An end result share pays $1 when it wins and nothing when it loses. Shopping for an costly favourite subsequently leaves little revenue on a profitable share, whereas a dropping share wipes out its buy price. Sufficient losses can outweigh many right calls.
Placing the identical greenback quantity into each race additionally buys completely different numbers of shares. A less expensive winner produces a bigger payout for that stake than an costly winner. Counting right predictions treats each race equally; calculating returns should account for these completely different payouts.
Reference costs restrict the betting conclusion
Bitquery averaged trades throughout the 24 hours earlier than 12:00 UTC on voting day. When a candidate had no commerce in that window, it used the final commerce inside the previous 30 days. For races that went to a runoff, it used the runoff date.
These averages, and doubtlessly stale fallback trades, are reference costs somewhat than assured purchase quotes on the cutoff. The revealed methodology doesn’t specify a full adjustment for spreads, slippage or charges. Polymarket’s present price web page lists a politics price vary of 0% to 1%, however doesn’t set up the fees on the historic trades on this pattern.
The research excluded 9 markets as a result of some settled earlier than voting, some lacked usable costs and one lacked a settlement document. It lined primaries within the 50 states utilizing Polygon commerce information, leaving out Polymarket’s US app and different venues reminiscent of Kalshi.
For November’s prediction markets, the excellence between forecasting and pricing stays helpful. The measured major document itself could not carry over: Bitquery cautions that common elections appeal to more cash and polling than small, native contests.
