Prediction markets have an elections problem
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As many mentioned here, the fees are high. That contributes to market inefficiency for sure.
Arbitrage opportunities pop up there all the time, but ones that are profitable after the fees less so. They do happen though.
He is neglecting how long contracts take to settle. There’s a lag of two months between when the election and when president is sworn in. It’s not unreasonable to sell your winning position at 98% just to be able to bet on more things.
It was the first time in 20 years of hoping for such an opportunity that I managed to get to bet on something that had already happened. That’s every gambler’s dream and I’m unaware of many instances of it happening without breaking laws or trickery. But even then, you bet 93 cents to win 7 and then pay 5% on cashout so it wasn’t exactly making people rich.
In less liquid in play sports betting exchanges have this happen all the time - generally you are getting $1 for every $1000 wagered and settlement will take anywhere from minutes to days depending upon the event.
I'll always recommend _Positively Fifth Street_ by James McManus. He doesn't really lay out how to do it step by step, but takes you along for a ride as to what the world looks like from that perspective. kinda.
The casino will ban you if you count cards in blackjack.
The sportsbooks will limit your action or ban you if the figure out you have an edge (or just see that you're winning or betting in certain patterns).
https://www.journalofaccountancy.com/issues/2018/oct/pro-gam...
but some deductions maybe yeah
Frustrating is definitely a great way to describe the game, and emotionally crushing. Like imagine one is playing a 5/10 no limit hold'em game - so people are generally buying in for about $1000, unless they're from Spain. An extremely good player might have a longterm winrate of around 3bb/100 there. In 100 hands, there's every chance you'll be involved multiple pots, easily for thousands of dollars. And your long-term expectation is about $30 out of all of that. So you'll go through short term swings where you're up tens of thousands of dollars in very short periods of time, swings where you're down tens of thousands of dollars - all to get your $30 per 100. And you never become completely numb to the money, even after playing millions of hands.
Or when an online casino is not careful enough about how you earn the bonuses they give you. Things of that nature. There are people also who can do it at things like horse, racing or sports betting, but I never knew enough about either of those or wanted to learn.
My Predictit wagering has mostly been on the theory that exactly what this article says is true: people are betting who they like and the polling aggregators are better. I really just look for arbitrage opportunities or discrepancies between the market and 538 that are large enough to overcome the fees.
The fees are high enough to make it not happen a ton, but it does happen.
Don't forget the risk of the whole prediction market ceasing to exist or doing something blatantly fraudulent.
But you're not. You're betting on whether the contract will settle and when. That's quite distinct from betting on the event itself.
There was a Chinese lottery scandal in the semi-recent past. Someone noticed that the winning numbers were posted before the close of ticket sales, and bought a winning ticket. And he completely got away with it.
Then, he did it again...
You think that's bad? Every month or so for like 6 months, there was another bet that the FBI was going to arrest Hillary by the end of the month and odds would be like between 7% and 13%. Every month, I bought more shares it wouldn't happen. The comments were all QAnon crap about the "The Kraken" coming. It was hilarious. Some of the comments were from me because I didn't want the gravy train to stop. Wasn't a full 7% return, though. Definitely lots of fees on Predictit.
[1]: https://oyc.yale.edu/economics/econ-252 [2]: https://iem.uiowa.edu/iem/
PredictIt charges 10% fee on profits and another 5% fee on withdrawals. So bets that have the potential to earn a few cents on the dollar aren't necessarily worth it. That's before considering how long you have to lock up your money in this contract.
Neither the time value of money nor the cost of trading explain these dislocations.
It was one of the 25 days out of 100 not one of the 75 days out of 100.
> these dislocations
The market puts the chance of flipping a coin and getting heads at 50%, when it comes up tails it doesn't mean that the market was irrationally pricing heads.
Meanwhile, both polls and analysts got those elections completely wrong, much more so than prediction markets. (IIRC, 538 was the only outlet that gave Trump a >20% chance to win, and they got a lot of bad words for their prediction pre-election.)
Unfortunately, people keep falling for this. You can always cherrypick elections from 7 years ago as "evidence" against prediction markets, but if you look at the bigger picture, you will see that they get a vast majority of elections right. But when they don't, even just once in a decade, they get all the blame.
There's plenty of research on this: https://researchdmr.com/RothschildPOQ2009.pdf
Honestly, why hasn't probability-centric mathematical pedagogy taken the world by storm?
Unclear if you think this is incorrect?
Obviously it happened, but most reasonable prediction methodologies put it between 20 and 30%. Notably 538 and Superforecasters (via The Good Judgement Project at the time) both had it in that range (as did prediction markets). There were some outliers - in particular some newspaper(?) had a statistical methodology that gave Clinton a 95%+ chance. In a two horse race that is obviously wrong!
I was working in the forecasting field at the time, and that seemed about right. It was an unlikely but not impossible outcome.
The real way to measure predictive accuracy is to find _all_ the times they gave something a 25% chance of happening. If the predictions are accurate then roughly 25% of those things should have happened.
What you should optimise instead is something like log loss between the given probability and the true outcome (0 or 1). That way you’re rewarded not only for being right, but for being confident and right.
What is being pointed out is that is not illogical when you fully understand it.
I will let you bet me that Taylor Swift is not the current president of the United States. For every $1 you bet, I will return $1.05 to you*. You can bet as much as you like and as often as you want - my email address is in my profile.
* 10% transaction fee applies
[1] www.electionbettingodds.com
[2] www.cnliberalism.org
Political Markets are filled with dumb money and not enough sharps. They are absurdly profitable to bet in bit are not frequent enough for pro gamblers to focus on.
So I buy a "no" contract for 98 cents, and sell it for $1 in most of a year. Maybe someone who has used the platform can chime in, but the terms of service seem to suggest I don't get any interest on my contract money meanwhile. So I'm underwater already probably, then I pay 5% to the platform when I withdraw. Obviously the time-value thing gets better as the end approaches, but you'd expect most low-probability events to decline in price too.
Of course if you already have a balance on PI, you just won in another market, and say it's Nov 6th and you've got nothing better to do... you might as well buy 99c shares because the $1 payout could be in as little as a couple days and what else are you doing with the money? So the high priced shares DO eventually sell but basically anything that's months away dies out in trading volume before it reaches the 99c mark.
Personally if I still had money sitting in PI I'd probably park my dry powder in NO on "Joe Biden resign in his first term", which has been as high as 10c this month, but even assuming I could get 90c NO shares that is not worth me moving money from my bank back into PI just to skim those pennies.
As I recall "no concession" was priced at like 40c, at the same time that Biden winning the election was priced at something like 55c-60c. I was pretty sure Trump was not going to concede, period, so this was just a substantially cheaper version of betting "Biden wins". And as it turned out, it also had the advantage that it closed much, much sooner than the actual election market -- thus freeing up my funds to go into those other markets that hung at 85c or so till December.
I made pretty good money just betting on him to win PA and FL.
Plenty of arbitrage opportunities exist on PredictIt that can’t be taken advantage of either because the platform’s cut of any profit you make on a bet will negate the arbitrage or because resolution is so far off that it would be more profitable to just invest in a CD.
The time value of money and fees certainly are part of it, but they don't explain things like, for example, the weight of money in the Trump-by-280+-EV contract.
This first sentence is completely unsupported. How do you know that the volume of comments tells you the amount of money bet?
Actually, sports betting does have a fan bias. I doubt many 49'er fans are going to bet on the Chiefs in the Super Bowl. It could well be that prediction markets give the wrong answer, but I'll still give them as much weight as FiveThirtyEight. Or more. FiveThirtyEight is hardly non-ideological, cold-eyed realism.
It's also true that smart money is not feasting on the dumb money, as a market really needs. The low volume and high costs of betting do make prediction markets less than perfect.
The behaviour of customers of lotteries is indeed clearly not perfectly rational if you consider the monetary expected value of your wins. On the other hand, the customers' behaviour gets much more rational if you consider the customer's utility function: a huge lottery win has a disproportional benefit for the customer with respect to the customer's utility function (since the lottery win will hopefully change the customer's life). In other words: what the customer optimizes for is the expected value of his utility function.
What is the exact shape of the convex utility function you theorise these people have? And what data supports that?
Indemnity insurance and lotteries are actually symmetric to each other: indemnity insure is about preventing big losses in a rare event, and lotteries are about winning big in a rare event.
The central difference is that the behaviour of people with respect to wins and losses is not symmetric, that is why insurance policies and lotteries are marketed quite differently.
> What is the exact shape of the convex utility function you theorise these people have? And what data supports that?
I am very sure that big lottery companies have data available to answer this question, but they won't make the data available. So I honestly admit that I don't know the answer, but I can propose an experiment how one might get a partial answer:
Create some lottery offers, paying out, say, 1000, 10.000, 100.000, 1.000.000, 10.000.000 $ with probabilities such that the expected payout is 5 $ for each of them. Now sell/auction the lottery tickets and look what prices customers are willing to pay. This should give a rough idea how the utility function might look like.
The discussion was specifically about negative-EV lotteries since those are the ones that require convex utility.
No, 5$. The reason is that you sell/auction these lottery tickets. The price that the customer pays has to be subtracted from this payout (and this way the final payout very likely will become negative). But the price that the customer will pay in this experiment is not known beforehand, so the initial payout has to be positive.
On the other hand, maybe they're somewhat useful as a rough indicator.
Rich people can go to tennis matches, get a pilot's licence, and buy stock options. Poor people have much fewer alternatives.
Most players are fully aware of this, just as most beer-drinkers drink in moderation. (See Brenner, Brenner & Brown for more data.)
That said, even for things that aren't publicly decided - the 'wisdom of the masses' [1] is very real and kind of weird phenomena. If you get people to try to guess how many beans are in a large jar, you'll get some people making really stupid guesses like 100, or a million. Yet when you average out the result over all answers, it tends to be extremely close to the right answer. At least unless you let people collaborate, then the effect disappears and we become stupid again. Kind of explains a lot of things.
[1] - https://en.wikipedia.org/wiki/Wisdom_of_the_crowd#Examples
https://kavehtehrani.medium.com/free-money-on-inauguration-d...
There's the theoretical risk of complacency, that people don't turn up to vote for your candidate because they think he will win anyway, but in practice that seems to be more than made up for with discouragement on the other side - especially on the donor's side. Voters may be willing to turn up to cast a vote of defiance, but self-interested donors will not throw money at a candidate who won't get in a position to reward them for it.
So if people are paying attention to prediction markets at all, why wouldn't a campaign pour money into it to create the perception that their candidate is doing better than they are? Betting on a statistically impossible walkover win isn't a problem if your goal is to create the impression of fanatic support anyway.
There's not that much money in these markets, so it shouldn't take all that much money to move them, in the scale of a US presidental election.
Long shot bets are almost always overpriced on PredictIt.
PredictIt specifically encourages these long shots to be over weighted thanks to their $850 risk limit in any given market. If one long-shot bettor places a max buy order for YES at 10c per share, the order book has 8500 buys at that price point. I can come along, see that what they're betting on is absolutely nuts and max out NO... but at 90c per share I can only fill 944 of those orders before I'm maxed out at my $850 risk limit. I might be supremely confident and WANT to bet $7,650 on this but I simply am not allowed to. So it takes eight more people like me to come along and plunk that money down before we're moving the needle on the order book.
In the 2020 election they somewhat mitigated this by making a dozen markets that were all basically the same question: Is Trump going to succeed at overturning this? They had markets for each state, plus combo markets they added like "Will Trump win any of AZ, GA, PA", plus the electoral college markets, the margin-of-victory markets, etc. But it was still way more effort to go in with a big chunk of change and manage spreading your bets out across all those different markets to max your $850 caps as efficiently as possible.
This is in addition to the other factors, that it is simply more FUN for people to gamble on long odds because it's like buying lottery tickets (who wouldn't want a 10:1 return?). And that, when you factor in fees, opportunity cost (I could have this money in the S&P 500), and counterparty risk (how long will my money be tied up if PredictIt gets shut down), it's really not very attractive to put money in shares in the $0.90-0.99 range unless A. you already have the cash sitting in your PredictIt balance and B. the end date of the market is known and approaching rapidly.
I even found a pure arbitrage opportunity.
But you can't really scale up to make it worthwhile on PredictIt due to bet size limitations.
The majority of traders seemingly looked at the headline and failed to understand the contract terms, which only required a "quarterly annualized" GDP growth of 5%, during at least one quarter of 2020. So a severe economic downturn in Q2, followed by even a modest recovery in Q3, would have made a "yes" outcome all but guaranteed.
The comments became pretty hilarious once someone pointed this out.
Nice way to blame the masses. Seems to me more like the terms contradicted the headline, thus making this a mechanism for exploiting people who assume they're making an honest bet. Seems like fraud, honestly.
The annual rate of increase in real gross domestic product (GDP) in one or more quarters prior to or including the fourth quarter of 2020, as rounded to the nearest tenth of a percent, per the advance, second or third estimate, as published subsequent to the launch of this market for any such quarter by the Bureau of Economic Analysis (BEA), shall be 5.0% or higher.
Any sane person will tell you "Will the US economy hit 5.0%+ GDP growth by year-end 2020?" means GDP at the end of 2020 will be at least 5% higher than it was at beginning of 2020 (unless there's an explicit starting point mentioned). Aside from the question of the data source, it's pretty crystal clear what it means, and that it lacks any notion of quarters or annualization. And it's very obviously different from "Will the US economy hit 5.0%+ annualized GDP growth in any quarter in 2020?", which is what the fine print is measuring.
"It" as in their intended title? It obviously didn't match what they wrote, hence the "clarification". Not particularly different from how politicians frequently "clarify" that by X they actually mean not-X...
Riddle me this: imagine your convince your spouse to pour all your joint savings into a $1M home because its value will hit 5%+ growth by the year's end. And then at the end of the year it turns out your home is now worth $500k, after briefly dipping down to $400k in Q3. On a scale of 1 to 10, exactly how amused do you think your spouse would be to find out you actually meant "annualized quarterly growth rounded to the nearest tenth of a percent"?
Even completely rational prediction markets generally have a structural problem with events with likelihoods close to 1.0 or 0.0. This leads to cases where conspiracy type events have much higher likelihoods than they should, leading people to assume the market has lost all rationality when actually it hasn't.
For example, imagine if there's an event with a predicted likelihood of 1 in 50, but it should actually be 1 in 1000.
Assuming the market uses real money, then on paper someone should be able to make a roughly 2% return by betting that the event won't occur. However, if this market isn't closing for a while (for example for an election at the end of the year), then no-one is incentivised to take the bet and correct the market, because they'll get a much better risk free return just by putting their money in a term deposit and collecting the interesting. And so the market remains un-corrected. Basically prediction markets have an accuracy upper bound determined by the current risk free return.
For markets using "play" money a slightly different effect is at play. When it's not real money involved, generally the people are incentivised to try and top a leaderboard of some sort. In this case, a really effective strategy for people who currently aren't near the top of the leaderboard is to take long shot bets. If they loose, who cares they weren't gonna win anyways, but if the the bet plays off they have a lot to gain. Basically there's an asymmetry in returns that once again messes with probabilities.
What if the deposited USD automatically earned interest at the current risk free return (think something like USDC on Aave in crypto land)?
Is there academic research on this by any chance? Recently I've been wondering if there is a similar issue with VC funded of startups, where people overestimate the odds of a building 10B or 100B business (especially relative to a 1B or 100M business), causing them to pursue investments and strategies with lower expected value.
Read "Secrets of Sand Hill Road".
It's written by Scott Kupor - one of the Managing Partner at A16Z - and explains in depth how the VC model works.
It's also required reading if you want to interview at a VC fund, and highly recommended by other founders to learn how to better strategize when raising funds.
Secrets of Sand Hill Road, Monetizing Innovation, and Working Backwards are the only books you need to successfully understand how to raise and build a VC funded startup. The pricing strategy guide by I think Sequoia is also useful.
I'm actually asking out of curiosity, born of working in and around SV companies over the last 10+ years, rather than anything practical.
It's not that people disagree with the market clearing price, and are motivated to take a position. It's that they don't want other people to converge on a prediction in this way, and want to ban it, or keep the stakes so small that the market doesn't attract real expertise.
It's like people are more into beliefs as decoration, rather than as something to compare and test against other people's beliefs.
If the algorithms for finding romantic partners are similar to netflix recommendations, then I think the aversion to them is totally warranted; I don't think that's the same thing. If a closed source algorithm makes bad recommendations, I can dismiss it as useless. If I don't like the price of a prediction market, I am forced to reconcile what I know about the structure of the market, with my personal beliefs.
Anytime these markets come up in conversation or are used in a thought experiment, it reveals how few of an individual's outwardly professed beliefs they themselves take seriously. It's almost like most of the time someone says they believe something they are actually trying to manipulate anyone listening, rather than solicit criticism to refine the belief.
PredictIt even used to have markets on, like, which SCOTUS justice would be the next to leave. People got paid when RBG died. That literally would've been this, if it weren't for the fact that the small investment limit kept the returns low. Realistically I don't think anybody was going to be committing assassinations just to make a thousand bucks.
The same things that keep prediction markets inaccurate keep them from causing bigger problems.
Do you have an example? I haven't seen this sentiment anywhere, including HN.
I haven't actually seen much resistance to the existence of prediction markets. HN leans heavily toward freedom and letting consenting adults do what they want with their money on the internet.
The majority of negative sentiment I see is against the obsession with prediction markets in certain circles (rationalist community, for example). Parts of the rationalist community speak about prediction markets as a solution for everything.
Do a Cmd+F for "stupid" on this very post. It may not be the prevailing sentiment, but it certainly occurs here. Maybe just a very vocal minority.
Predict it has something like an $800 maximum. That's simply too small to get a PhD to quit his day job and start trading on prediction markets for a living. Until the market capitalization can attract experts, it will not reflect the opinions of experts. This seems to be a bureaucratic restriction. Why aren't the big exchanges creating order books for these markets?
To my knowledge, these markets are deliberately restricted. If you allowed unlimited betting, then experts would come in and eat these uninformed bettor's lunches. Except if you allowed that, then you face an ethical problem. You'd be providing a way for people to profit from influencing outcomes (e.g. questions that could resolve based on someone's death).
Identify areas of likely incorrect spreads, and invest against them.
Let’s take a simple example, which is Donald Trump‘s current odds of winning the Republican nomination. Predictit currently has this at $0.92. Realistically I think the odds are higher. Not 100% but higher than $0.92. The problem is that the maximum I can bet is $500, so that’s 543 “shares” that I can buy. And I’ll make $0.08 on each share if he wins, so that’s $43. Then when I withdraw my money I will get a 5% fee, so my initial $500 turns in to $516. Oh, and then I have to wait until primaries, and for it to actually pay out. And there IS a non zero chance trump loses. Very few individuals will care about turning $500 into $515, so this bet makes sense. And since you have a cap on bet size, no institution will care either.
sounds like a rational market to me.
This conclusion is incredibly vague. What are "the right incentives in the right way"? Is there anything concrete that the author proposes here?
If you have some deep subject knowledge to make a prediction, your bet will be drowned by others. Sure, you can make a buck from your prediction, but you won't get instantly rich, and you won't be able to make these kinds of bets consistently.
At least then they would break even in an efficient market. But it isn't an efficient market due to fees and opportunity cost... So you're right, it is irrational to participate.
Realistically, to my knowledge, this isn't really possible on current platforms since they have built in limitations and fees.
- money was cheap (low interest rates)
- bets were short-term
Otherwise, the profit-share demolished gains as a de-facto trading fee. Plus you could only make money on a few hundred at a time. I did some of the cheap bets that were mispriced but also some more obvious ones. A few multiples on the money, but it was too unwieldy to play it. The politics ones are easy. People like to bet on the outcome they'd like to occur rather than the one they think will occur.
I understand, though. I find it hard to bet against Arsenal. Just seems like a miserable way to live.
It seems like a mistake a time traveler would make... who doesn't care enough to fix their mistakes.
Given the betting odds it's possible to calculate upper and lower bounds on the probabilities. Ideally you would take into account the fees and the opportunity cost of having your money locked in the bet. The bounds would be the range in which it wouldn't be possible to make an expected profit by betting either way.
The advantage would be that instead of an absurd point estimate like "Michelle Obama has a 6.90% of winning the election" you'd get something like "the probability of Michelle Obama winning the election is between 7.0% and 0.01%". Which makes it clear that while the upper bound can't be driven to 0, the lower bound is perfectly sensible.
A probability distribution is defined over a set of outcomes. If “Michelle Obama winning” is one independent, categorical outcome, then there is one probability associated with that outcome.
> you'd get something like "the probability of Michelle Obama winning the election is between 7.0% and 0.01%"
Stacking another layer of probability on top of probability distributions still results in only one final distribution for prediction purposes.
I think maybe what you’re trying to capture is how your “confidence” about a prediction ties into the evaluation of the reward or penalty. This would just be modulated by adjusting how wide/uniform your probability distribution is and the amount that you bet, but perhaps the websites could add some tools to help people visualize this better.
While I'd concede that "they're stupid" is probably the primary reason someone might go for the Michelle Obama bet, I can think of AT LEAST one other -- e.g, I'm insanely rich Tyler Perry, and I just like the idea of that being in the air?
So despite the "advocates claim that by providing a marketplace for bets on uncertain events, prediction markets give predictors a financial incentive to be correct", what happens is that prediction markets give predictors a financial incentive to make it be correct, which leads to all sorts of shenanigans in practice. Look at the stock market, which largely is a predictions market, and look at how much regulatory machinery is needed to dissuade obvious scams like insider trading and pump & dumps. And even then, the stock market is highly irrational precisely because of the financial incentive; look at how many years it's taken the GME fiasco to shake out and how many true believers are not merely still holding the bag, but buying up as many bags as they can.
The ultimate example that I always trot out is that a predictions market on the topic of "will $PROMINENT_POLITICIAN be dead by $DATE" is just a distributed assassination contract (to be fair, it's also a distributed bodyguard contract...). Welcome to the free market, I hope your friends are richer than your enemies!
He talked about it on Bill Simmons Podcast and was just incredulous at how people could be that stupid and how much money had made betting on something that was a stone cold lock.
The election wasn’t “over” until certification happened (late) on January 6.
Why should bettors be prohibited from continuing to bet?
And worse, if bets were resolved too early, then chaos would have ensued in the betting market if the electors were not certified and the House selected Donald Trump.
Many ppl here may be too young to remember 2000 where recounts kept going on and on in Florida and the Supreme Court intervened.
Again, I’m not advocating any position, I’m just pointing out that the election isn’t over just because $NEWS_SOURCE declares a winner.
FWIW, Gore conceded after 36 days within hours of the release of the SCOTUS decision.
That was not impossible at all once you take into account Trump's VP certification plan, which many people understood very early on. A longshot, yes, but certainly not impossible.
If anything, the prediction markets priced in an insurrection better than any pundit I recall watching. To flip it around and call prediction markets "irrational" in this situation is misguided and ignorant of political history.
They are saying "I will spend $,000 just to show that I support Trump to the point where I [pretend to] believe him when he says he won the election [that he clearly just lost]". It's MAGA culture's way of - wait for it - virtue signaling.
And the prediction market is just vacuuming up most of that money for themselves. You can bet against it for a nominal profit, but you're paying the vig to do it, and the vig is a big chunk when the odds are sitting at 9:1.
Even up to about a week before the actual 2020 election, she was still trading at almost 10 cents on the dollar for “yes she is running.” Just wild. I don’t think it’s a problem for these markets, just the nature of the beast being that people easily believe conspiracy theories and propaganda and if you’re a gambler there’s a lot of money to make.
It would be nice if there was a platform that didn't have limits and had interest rates closer to savings interest rates.
PredicitIt is irrelevant to the conversation. It's high fees an miniscule limits completely distorts what is "rational" or "reasonable" to expect the market to do.
Betfair on the other hand is a reasonable thing to talk about. 2% fee on net winnings on a market and zero deposit or withdrawl fees makes it a pretty efficeint market for political betting.
The Betfair political markets are dumb as a bag of rocks and there simply isn't enough smart money to suck up the dumb money. Political markets are incredibly thin, the average India Premier League cricket match gets way, way more action than all but the very largest political markets. The 2020 Presidential election was fairly unique in that the majority of the money was wagered after the election happened and after it was clear Biden had even. Idiot Trump supporters buying into conspiracy theories flooded the market with money.
Political betting is very easy _but_ compared to sports gambling there is no where near enough events to make a living doing it. It's all very well having a huge edge (and betting on a even that has already completed is the largest edge you could ever have) but if you only get 1 betting opportunity a year that's not a way to make a living. It is a great way to have some fun though.
Even in 2016, two days after the election, Clinton was @1.05 to win the popular vote. Right now on Betfair, despite almost £6 million having been traded on the market Michelle Obama is the 2nd favourite for the Democratic nomination @9.2 (that's a better than 10% chance). (For comparison about market size currently the Comilla Victorians vs Rangpur Riders match has over 4.5 million wagered).
First, let's clear up some confusion.
Markets are not accurate ways to determine accurate predictions. Somebody, somewhere is getting confused with "Wisdom of the Crowds" thinking.
In the "Wisdom of the Crowds" - take, for example, everyone at the State fair taking a guess at how heavy a bull is - everyone has a single guess (and only one guess), and on aggregate you'll probably (that word is doing a lot of work here), get a more accurate answer than any one answer probably (again, lot of work there), will. You're reducing a distribution of guesses into a single number, and the distribution of those guesses is likely uniform, and likely going to find an average (and a median), quite close to the true value.
Markets are not that. They are not efficient, they aren't accurate predictions. They are about weight of money. One moron who is hellbent on a World view with $10m in his account goes up against 1000 people with $10 each in their account, is going to move the number in their favour.
We see this irrationality every day in sports trading, stocks, commodities, options, FX, crypto, you name it.
In fact irrationality is so common in markets because of the weight of money there is a famous saying (often misattributed to Keynes):
"The market can remain irrational longer than you can remain solvent."
Time and time again its come true. All you need to do is look into the LTCM fiasco where Nobel Prize winners in economics (literally the creators of the Black-Scholes model), took a rational view of the market, bet on it big, and almost took down Wall Street in its entirety. They weren't wrong, they were just on the wrong side of the weight of money.
I spend a lot of time trading sports (gambling is legal and tax free where I live, and well regulated betting exchanges exist), and thinking a lot about value. What does it mean to say a price about a selection in a market is wrong when it comes to some men running a field after a ball? There's a lot of people interested in this problem, and there is some evidence that they're not awful at it (Vegas lines on NFL games for example, adjusted to remove the house edge, converted into probabilities, aren't far away from observed outcomes), but every day awful prices are put up all over the place and still taken as if value by morons.
Is it any surprise that newly-minted crypto-millionaires hold a lot of money in a market and can throw the price off? Not really.
What you should do about it? Bet against. Take the action. Understand Kelly criterion, do the math, and trade that. You will bring the market back to reasonable pricing through applying your own weight of money and make a profit while doing so.
Why aren't others doing so? Who knows. Liquidity, being busy with something else, not wanting to, there's a multitude of reasons. But when you spot value - somebody offering you money on the table betting for things that are literally impossible - I suggest you stop complaining and fill your boots. Morons are born every minute, but it's not often enough a lucky millionaire one is prepared to hand you their money on a plate.
If media pundits are looking at these things as predictors of something, well you know there is one less media pundit to trust on this topic as they clearly have got confused. The next time they spout something that sounds statistical or mathematical or based in science, question if it actually is. Or if they, like many others before them, have confused markets for efficient proxies to uncover genuine wisdom, through the use of weight of money as the best means to extract secrets from the gods.