How Polymarket Predicted Trump: The Inside Story As FBI Raids CEO’s Home

It was a thumping victory that took even some of Donald Trump’s most ardent supporters by surprise: a clean sweep of battleground states. Certainly few pollsters saw it coming.
However, a new breed of forecaster seemed one step ahead, as betting markets and crypto-based predictors called it first.
Or, as former Fox Host Megyn Kelly said: “Polling is a lie. They don’t know anything.”
That new breed of forecaster—notably in the form of Shayne Coplan, the 26-year-old founder of the crypto-based prediction market Polymarket that consistently forecasted a Trump victory—has now been thrown into the spotlight once again.
Coplan was the target of an FBI raid on Wednesday, with his phone and other electronic devices seized during the operation.
The raid is believed to be linked to a U.S. Justice Department investigation into whether Polymarket accepted trades from users based in the United States. Currently, the platform is unavailable to U.S. customers, although some traders have reportedly found ways to access it using VPNs.
A Polymarket spokesperson characterized it as “political retribution” by the Biden administration, a sentiment later echoed by Coplan on X, formerly Twitter, who said it was “discouraging that the current administration would seek a last-ditch effort to go after companies they deem to be associated with political opponents.”
It is another twist in an election characterized by seismic shifts, not least a 13-point surge in the Latino vote toward Trump. The President-elect’s success also appeared to usher in a new age of political predictions and has again cast doubt on the credibility of America’s polling class.
Polls across the board called the race as a coin toss, projecting split battlegrounds and a few hundred thousand votes determining the winner of the popular vote. That was before Trump swept the swing states and bagged three million more votes than Kamala Harris.
In the weeks leading up to the election, FiveThirtyEight’s average of polls consistently showed Harris marginally ahead of her Republican rival, and indicated America would see one of its closest races in recent history. The site’s electoral college forecast also favored Harris, albeit only slightly.
On Polymarket, the former president began to pull ahead of Harris early in October. By November 4, one day before election night, the odds were around 56/43 in Trump’s favor.
While Harris overtook Trump for brief periods in August and September, Polymarket odds favored him for the majority of the race, his chances of success never dipping far below 50 percent—or 50 cents in Polymarket terms.
“This is an inflection point in news and politics,” Coplan told CNBC on Thursday following the election.
Highlighting the credibility Polymarket had achieved, CNBC Squawk Box co-host Joe Kernen told Coplan that he paid more attention to his platform than the polls being scrutinized by the media on election night.
“On Polymarket it looked like a done deal,” Coplan responded, “and if you were just watching TV, you would think it’s neck and neck.”
But how was Polymarket able to pull this off, and how reliable will the collective wisdom of its users prove for predicting future political events?
Polymarket is a decentralized “prediction market” platform, which allows its users to wager on the results of elections and other world events.
Its users buy and sell shares in potential outcomes, the prices and payouts of which range from 1 cent to one dollar, and the platform requires its users to connect to the platform using a crypto wallet and to pay using the USDC stablecoin, a cryptocurrency pegged to the real-world value of the U.S. dollar.
Unlike sports betting, Polymarket operates on a peer-to-peer blockchain trading model, meaning that individuals are purchasing bets from each other rather than one centralized bookie.
Users in the U.S. were technically barred from making bets on the platform, after the Commodity Futures Trading Commission stopped its operations in 2022.
However, many in online crypto communities pointed to easy workarounds, such as the use of a virtual private network (VPN), to make wagers.
In his recent CNBC interview, Coplan said that the site was filled with “smart money,” and individuals who had paid serious attention to even minor developments on the campaign trail.
While he acknowledged that many bets were placed by amateur investors, he said that this “adds to the liquidity of the market,” ensuring that solitary, large bets do not skew the odds too greatly.
While basic crypto literacy is needed to use the platform, “trading is not limited to crypto enthusiasts,” an individual who works with Polymarket told Newsweek. “Anyone with USDC—which is one of the most popular stablecoins in the world—can place a trade on Polymarket.”
To do so appeared easy enough, with nearly $3.7 billion in total wagered on the contest between Harris and Trump.
Unlike many other betting markets and traditional bookmakers, Polymarket does not charge fees for trading shares on its platform, though trading will likely incur fees from third parties due to the necessary blockchain operations.
The company says that this “means that Polymarket does not stand to benefit from the outcome of any market.”
While Polymarket’s exact source of revenue is unclear, many assume it charges a small fee to the net profits from winning trades, subtracted from the earnings of users with successful predictions.
In an August interview with Forbes, Coplan said that the platform did not currently charge users for making transactions, but indicated that this could change once Polymarket reached the mainstream.
We’re focused on growing the marketplace right now and providing the best user experience,” the founder said. “We’ll focus on monetization later.”
“Prediction markets are often more accurate than pundits because they combine news, polls, and expert opinions into a single value that represents the market’s view of an event’s odds,” according to Polymarket’s website.
According to Coplan himself, “a disparate group of market participants is more accurate than any given expert,” and certain elements of the Polymarket model give some indication as to why it could better predict an election result.
Polymarket is based on outcome betting, the odds determined by the measure of wagers on what people believe will happen, rather than what they hope might.
“Prediction markets are not like polls: prediction markets demonstrate the probability of an event occurring, not a specific action that an individual will take,” a Polymarket source told Newsweek.
This may make Polymarket immune to some of the issues which pollsters said had led to them underestimating Trump in the election, such as the existence of “shy Trump voters,” who either wouldn’t turn out for polls or were reluctant to tell a pollster that they supported the former president.
A decentralized betting platform like Polymarket may also be exempt from the stigma which plagues conventional pollsters, themselves viewed to some alongside the legacy media as representing the establishment forces against which Trump positioned himself.
“One of the main issues is that Trump’s base is harder to reach through traditional polling methods,” Scott Keeter, senior fellow at Pew Research Center, said. “Trump supporters tend to have lower levels of trust in institutions, including those conducting polls, which can skew results.”
“President Trump has an appeal that no other politician has on some of his followers,” Josh Clinton, professor of political science and co-director of the Vanderbilt Poll at Vanderbilt University, previously told Newsweek. “These followers are also those that are less likely to trust the establishment and, as a result, participate in polls.”
Polymarket’s users also have a financial stake in betting on the right outcome, motivating them to make the “smarter bet” whether or not this was the result they are hoping—or voting—for.
“When someone has skin in the game, they are far more likely to be honest about who they think is going to win,” a source at Polymarket told Newsweek.
In early October, when Polymarket had Trump leading Harris 51 percent to 48, Elon Musk declared that prediction markets were “more accurate than polls, as actual money is on the line.”
This appears to be backed by the success other similar platform’s had in predicting Trump’s success
The prediction market Kalshi gave Trump better odds for an almost uninterrupted stretch between Oct. 9 and Election Day.
Robinhood debuted a presidential betting market in late October, which later had Trump at 55 percent while Vice President Kamala Harris stood at 46 percent on Nov. 4.
However, bettors on these platforms were not exclusively bullish on Trump throughout the election, nor were they uniform in their forecasts.
Kalshi had Harris leading for a few hours on Nov. 3, Polymarket gave her better odds throughout much of September, and Predictit, New Zealand-based prediction market, had Trump leading by only 1 point on Nov. 4.
At certain points in the race, each of these markets also provided differing odds for the same outcomes which, as economist James Broughel wrote in Forbes, “should be impossible in efficient markets.”
“In theory, such discrepancies create risk-free arbitrage opportunities,” Broughel said. “Traders could bet on the lower-priced candidate in each market, guaranteeing a profit regardless of the outcome.”
This begs the question of whether there was anything more accurate than the pollsters, or whether Polymarket’s bettors were just on the money on this occasion.
There are some limitations in using Polymarket as a political barometer.
An investigation by two blockchain firms, and published by Fortune in late October, found that a third of wagers on the site were “wash trades”—the simultaneous buying and selling of assets to create the impression of high-volume activity.
Skepticism of the market’s legitimacy was also heightened in mid-October, after a shift in the odds in Trump’s favor was found to be caused by only four accounts, which had collectively bet $30 million worth of cryptocurrency on the former president.
The odds on Polymarket are also determined by the value of certain trades, and not the number of individuals betting on a particular outcome, meaning that even a small group of wealthy investors could skew the forecasts one way or another.
Occasionally these proved to be multiple accounts owned by a single investor, as was the case with Polymarket’s “Trump Whale” who raked in an estimated $50 million by going all in on the former president.
The individual, referred to by the Wall Street Journal as Théo, said that he was, in essence, betting against the polls.
Coplan defended this issue with Polymarket by saying that for every large bet on one side, this would increase the allure of making a bet on the opposite outcome, and that there was enough liquidity in the market so that “some trade someone made two weeks ago doesn’t have bearing on what the price is right-now.”
While the odds on Polymarkets website may be able to “combine news, polls, and expert opinions into a single value,” as the company claims, it is still the case that its users will be using polls to inform their bets.
“It is not clear to me how accurate those would be in a world without polls.” Scott Keeter of Pew said.
Well, many of them actually weren’t that wrong. Pew’s Scott Keeter told Newsweek that the average poll miss in this election was “around two and a half points,” which he said was a normal blunder by typical polling standards.
Keeter argues that the outsized impact of this underestimation, which resulted in what some hailed as a “Trump landslide,” was that the election was in fact close.
“Whichever candidate did even a little better than the polls would end up winning most or all of the states,” Keeter said. “To put 2024 in perspective, the errors are about the same as in 2012, when polls underestimated Barack Obama’s margin.”
“I definitely disagree with the notion that polls were wrong,” Chris Jackson, Senior Vice President of U.S. Public Affairs at Ipsos, previously told Newsweek. “There were multiple polls published showing Trump winning in these states and any pollster actually on the record was clear that the election was going to come down to which side better turned out its base.”
“The polls were not perfect, but this was not 2016. It was 100 percent clear that Trump could win,” Courtney Kennedy of Pew added.
It’s also hard to say that the polls, even those which gave Trump a modest 30 percent chance of success, were inaccurate. It may simply be that the final outcome fell within the predicted range of probabilities, even if it was on the lower end.
While his victory was less than assured by the pollsters, the extent of his win was a surprise to almost everyone, Polymarket included.
Until November 6, Polymarket gave Trump virtually no chance of winning the popular vote, and his chances of securing all seven of the swing states stood at 16 percent, both of which he went on to do.
Polymarket bettors also faltered on other election-related wagers.
On Aug. 5, Josh Shapiro was the heavy favorite to become Kamala Harris’s running mate, shares in the Pennsylvania governor trading at 68 cents on the platform.
Only one day later, Harris selected Tim Walz.
While this one bad bet does not discount Polymarket, as pollsters similarly gave the Minnesota governor only slim chances, it raises the question of whether the prediction market should be hailed as the future of political predictions based on one good one.
“Prediction markets have utility,” Thomas Gift of University College London said. “But there’s not enough of a track record to draw conclusions about their strengths and weaknesses in forecasting accuracy.
“Presidential elections only happen every four years. So their rarity makes it difficult to assess how prediction markets perform in these high-stakes events over time.”
Coplan calling Trump’s win “an inflection point” in political forecasting may therefore be premature. Speculative investors will not immediately replace the nation’s speculative pollsters, despite their recent blows.
But one thing is certain: Polymarket has firmly entered the political arena, and will be a key touchstone for those attempting to forecast the country’s political future.
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