Bettors Lose Millions Predicting the New Pope as Polymarket Edge Fizzles Out

Bettors on crypto prediction platform Polymarket have, in latest months, developed an enviable fame for beating the bookies.

So it got here as a shock on Thursday after they acquired the end result of the papal conclave very fallacious certainly.

Winner Robert Francis Prevost wasn’t amongst the favorites, with bettors solely giving the US-born cardinal round a 1% probability of succeeding Pope Francis forward of the outcome.

Polymarket bettors, like conventional betting markets, gave Cardinal Pietro Parolin the highest odds, at 28%.

With over $28 million of bets positioned on candidates aside from Prevost, the outcome was a complete wipeout for a lot of bettors.

The occasion throws into query the perceived heightened accuracy of betting markets like Poymarket over standard polls.

Polymarket lets customers wager on the outcomes of every thing from soccer fixtures to political elections. Unlike conventional betting platforms, the place the home units the odds primarily based on its greatest diligence, Polymarket odds are a real-time reflection of the bets positioned by customers.

Simply put, the extra demand there’s for a sure end result, the greater the odds and the costs paid for the bets are.

In November, Polymarket gained mainstream notoriety when bettors gave Republican candidate Donald Trump considerably greater odds than most different sources to win the US presidency.

“Polymarket prices seem to be wrapping up the views of smart money pretty well,” Koleman Stumpf, an economics professor at Wake Forest University in North Carolina, instructed CoinDesk at the time, noting that Polymarket bettors appeared to have a slight edge in predicting the election end result.

A historic information evaluation carried out by New York City-based information scientist Alex McCullough confirmed Polymarket beforehand predicted the end result of world occasions one month out with 90% accuracy.

What went fallacious?

The cause Polymarket bettors acquired the papal conclave outcome so fallacious is that the occasion is extraordinarily exhausting to foretell, Domer, one in every of Polymarket’s high pseudonymous bettors, stated on X.

“It’s like walking into a store that doesn’t communicate with the outside world,” he stated. “Not even the participants themselves would probably know how to handicap it.”

Since it’s exhausting for bettors to search out an edge with such an esoteric wager, many doubtless defaulted to following the opinions of conventional betting markets and the media, leading to the shut alignment of odds between Polymarket and different betting markets like Betfair.

The rarity of papal conclaves may additionally have made issues troublesome.

Pope Francis, the earlier pope, was appointed in 2013, years earlier than blockchain-based betting platforms like Polymarket existed. It’s additionally attainable that many Polymarket bettors doubtless had no prior expertise betting on the occasion.

Political elections, the place Polymarket odds have lined up nearer to outcomes, are far more frequent and broadly understood.

According to Domer, the actual edge in betting on the papal conclave shouldn’t be selecting the appropriate candidate however moderately betting towards these with too-high odds.

He chalked up the excessive odds of heavy favorites Parolin, and Cardinal Luis Antonio Tagle, who Polymarket bettors gave a 20% probability of profitable, to their reputation with the public and the media.

“The pricing for Parolin and Tagle were way too high, and high for not very good reasons,” he said.

Read more: Polymarket is 90% Accurate in Predicting World Events: Research