Harris Likely to Pick Pennsylvania Gov. Shapiro for Veep, Prediction Markets Say

As an analyst, I anticipate that U.S. Vice President Kamala Harris will unveil her chosen running mate by the coming Tuesday. The collective wisdom of prediction markets points towards a strong favorite for this selection.

According to traders on the cryptocurrency-based prediction market, Polymarket, Josh Shapiro, currently the governor of Pennsylvania, appears to have the greatest likelihood of being chosen for a position.

In the morning trading session in New York on Monday, shares for Shaprio were priced at 68 cents, suggesting that the market believes there’s a 68% likelihood he will be nominated as the Democratic vice president nominee. Each share offers a potential payout of one US dollar if this prediction materializes, with no return if it does not. These wagers are automated through a smart contract on the Polygon blockchain.

Minnesota Governor Tim Walz is currently playing catch-up to Shapiro with approximately one out of four chances (23%). The remaining candidates are all hovering in the low single digits. So far, a staggering $104 million has been wagered on the Democratic vice presidential nomination contract, positioning it as Polymarket’s third-largest bet by volume.

In a key election state, Shapiro enjoys high favor among his voters, as indicated by a recent poll from Fox News that places his approval rating at 61%. However, there are those on the more progressive side of the Democratic party who express disapproval towards him due to his stance on Israel and school vouchers.

As a crypto investor, I’ve noticed a striking resemblance between PredictIt, a conventional betting platform, and my usual crypto exchange. In this case, PredictIt is settling trades in good old dollars. Interestingly, it shows a pattern that’s quite familiar to me – 66% odds for Shapiro and 26% for Waltz. This feels like the market consensus, much like when I see high demand for a particular cryptocurrency on my exchange.

In 2020, Polymarket experienced a remarkable surge, fueled by increased interest in predictive election wagers. The monthly trading volume skyrocketed from June to an astounding $387 million in July, as reported by Dune Analytics.

In simpler terms, prediction markets enable individuals to wager on various real-life occurrences such as elections, sports games, or weather conditions. Advocates argue that these markets provide a more accurate gauge of public opinion and forecasts compared to surveys like polls because the investors have actual funds at stake and are highly motivated to perform detailed research and honestly express their opinions.

Harris gains on Trump

Over the past few weeks, both prediction market opinions and poll results indicate that the U.S. presidential contest wasn’t primarily about Donald Trump’s appeal, but rather reflected a lack of support for Joe Biden.

538’s polling averages show that Harris has significantly narrowed her gap behind Trump, and the two are now statistically tied.

Harris has the same momentum in prediction markets, but hasn’t yet closed the gap.

On Polymarket, gamblers predict a narrow advantage for Trump at 53%, while Harris has seen a six-point increase over the last week, leading 44%.

In the RealClear Polling Average, traders are betting that Vice President Harris might defeat President Trump, as the current numbers show Trump with 47.7% and Harris slightly behind at 46.9%.

Markets that measure a second-order effect of Harris’ surge are also feeling an effect.

Although a balance-of-power agreement remains most likely to result in a Republican majority with a 30% probability, financial markets showing an increase when predicting a Democratic victory in the presidency and at least one chamber of Congress are on the rise.

Similarly, another contract predicting a Trump victory in all swing states has dropped by 4 percentage points over the past week, and a significant 35 percentage points during the last month, following Biden’s series of stumbles during their debates against Trump.

The market is eagerly anticipating the official confirmation of the first debate between Trump and Harris, an occurrence that might significantly impact the markets. However, Trump’s team has announced that the debate originally scheduled for September 10th on ABC has been canceled following Biden’s withdrawal. Instead, they have suggested a debate a few days earlier on Fox News, which is favorable to Republicans, and with a full audience present.

To date, the Harris campaign has declined, and current market predictions suggest a 37% likelihood that she will attend an event before October 15th.

Culture-war bets

As a sports analyst, I’ve confirmed, based on the International Olympic Committee’s assessment, that both Yu-Ting Lin (from Taiwan) and Imane Khelif (from Algeria) are biologically identified as females.

As a crypto analyst, I’ve noticed a recurring theme on Twitter within the crypto community that has been expressing reservations towards statements issued by IOC. A humorous meme has sprung up on this platform, suggesting an opportunity for significant profit from wagers placed on athletes suspected of being males competing in women’s sports events.

But did this meme translate into a higher betting volume compared to other sports markets?

Sort of.

On Polymarket, a wagering agreement has been established concerning the outcome of the Women’s Welterweight boxing event at the Olympics, featuring Khelif as one of the competitors. This contract currently holds approximately $60,000 in stakes, placing it right in the heart of sports-related bets available on the platform.

Wagers on which nation will amass the highest number of medals, as well as the outcomes of basketball games, soccer matches, men’s tennis tournaments, and the 100-meter dash are all attracting a great deal of attention in betting markets, with basketball being the most popular by far, raking in approximately $1.5 million.

As a crypto investor, I can see the reasoning behind this because just like how basketball and soccer are widely recognized and have well-known figures like Novak Djokovic, cryptocurrency also has its popular coins that attract a large number of investors. Additionally, similar to how the excitement of the 100-meter dash’s close finishes triggers bettors’ instincts, the volatile nature of the crypto market can spark our own sense of competition and risk-taking.

But the women’s boxing contract still has much more volume than other well-known sports or personalities, like one asking about gymnast Simone Biles’ – star of a recent Netflix documentary – medal count.

As a researcher, I’ve observed that controversy can indeed invigorate the world of sports. Take, for instance, the Olympic Games, where the opening ceremony often transforms into a focal point of cultural debates. Surprisingly, this has led to a significant increase in viewership ratings – a clear testament to the intrigue and excitement that controversy can stir within us spectators.

Rate cuts soon?

As an analyst, I experienced a tumultuous Monday trading day in the crypto market due to the unraveling of the Japanese Yen carry trade, which led to massive liquidations totaling over $1 billion during Asia’s trading hours. This sudden downturn caused ether to plummet by 20% and bitcoin by 15%, effectively wiping out year-to-date gains. When U.S. markets opened, the global selloff escalated even further.

The recent developments have sparked a lively debate about potential interest rate reductions in the U.S. Initially, a significant group of traders were not expecting any cuts, with the market estimating less than a 40% probability of more than one cut taking place this year.

Currently, users trading on Kalshi – a U.S.-authorized prediction market platform that settles trades in USD – are placing bets on a potential 100-basis-point reduction taking place this year. Furthermore, they believe there is a 90% likelihood that the first rate cut will occur following the September meeting.

On Polymarket, wagerers have significantly increased their stakes, indicating a 60% likelihood that an unexpected Federal Reserve meeting will take place. This refers to a gathering convened outside the regular schedule.

It’s noteworthy that traders in conventional markets, using interest rate futures, have predicted a 100% probability of at least a 50 basis points reduction in Fed rates by their September meeting. In contrast, on Polymarket, bettors are only forecasting a 66% likelihood for the same event to occur.

If there’s any positive indication for cryptocurrency, it lies in the fact that Bitcoin is unlikely to experience significant further drops. On Monday during Asian business hours, Bitcoin dipped below $50,000 but subsequently recovered. According to Kalshi and Polymarket bettors, Bitcoin may reach its lowest point this year at around $44,000, while it has a 56% probability of not falling below $45,000 before the end of August.