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Casey Wagner of Blockworks’ Forward Guidance newsletter is exclusively taking over the Daily today. If you enjoy these editions, be sure to subscribe to Forward Guidance for daily updates on the growing intersection between crypto and macroeconomics, policy and finance. 

Banned gambling platform prone to manipulation? You don’t say. 

I’ve said it before and I’ll say it again: US persons are banned from Polymarket. 

Per a 2022 settlement with the CFTC, Polymarket is required to block US users. 

Obviously, we know this hasn’t stopped people from circumventing the rules (and writing how-to’s to help others do the same). But still, I’ve found the widespread acceptance of Polymarket odds as a proxy for the 2024 presidential election outcome confounding. 

Odd Lots co-host Tracy Alloway said it best: 

Latest polls from Emerson College released Friday have Harris leading Trump 49% to 48%. FiveThirtyEight is reporting similar numbers, with Thursday’s numbers showing Harris at 48% and Trump at 46%. 

Polymarket is the outlier. On the prediction markets, Trump is in the lead with 60% and Harris trails with 39%. 

Of course, Polymarket is not a poll (Elon Musk argues that betting markets are even more accurate because “money is on the line,” plus, we all know what happened in 2016). But the odds having skewed so heavily toward Trump in just a matter of weeks on Polymarket — Harris and Trump were neck-in-neck at the beginning of the month — has raised eyebrows. 

Four accounts (Fredi9999, Theo4, PrincessCaro and Michie) have poured $30 million+ into Trump bets in recent weeks. They are mostly betting on Trump winning the presidency, but they are also wagering that he will earn the popular vote. They’ve “pushed Polymarket’s market much higher than anyone is willing to bet it down,” fellow prediction marketplace Manifold Markets wrote in a Thursday blog post. 

It’s worth noting that Polymarket bettors have, historically, called some things correctly. They predicted that Biden would win in 2020, and over the summer also accurately predicted that he’d drop out of the race. Markets have also been right about Supreme Court decisions, including the ruling earlier this month that upheld Texas abortion laws. 

Kalshi, a US-based prediction market, earlier this month won its appeal against the CFTC and legally re-opened betting on Congressional race outcomes to US users. Presidential election bets are still prohibited on the platform. 

Even after Kalshi’s court win, Polymarket remained elusive. The company declined to comment on the ruling and/or share any plans (or lack thereof) to try to re-enter the US legally. 

This wasn’t a huge shock though, considering Polymarket got a not-so-favorable shoutout in the Kalshi appeals ruling: “Whether Polymarket has complied with the latter limitation is in question,” Judge Patricia Millett wrote in her opinion. (“Latter limitation” here refers to Polymarket’s requirement to block US persons.) 

Plus, US “ban” or not, Polymarket is by all accounts wildly successful. Its US presidential election market has surpassed $2 billion in volume to date, according to data from Dune Analytics. 

So far in October, volume across the platform has already broken its 30-day record, coming in at $917 million as of Thursday. 

Why spend the time and money in the court system to get the greenlight in the US if it doesn’t have to?

— Casey Wagner

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Happy Friday! Economic data this week mostly surprised to the upside, helping to lower expectations that we may see another 50 basis points shaved off rates before the end of the year. Here’s a recap: 

• As we wrote about yesterday, initial jobless claims came in lower than expected at 241,000 vs. the anticipated 260,000. Volatility from Hurricanes Helene and Milton seems to be easing, but could continue as rebuilding and clean-up efforts progress, so it’s a figure to keep an eye on. Continuing claims came in just a bit higher than expected at 1.867 million vs. 1.865 million, but broadly, the labor market looks pretty strong. 

• In other good news, US retail sales also beat expectations this week, showing a 0.4% month-over-month increase in purchase value from September. This compared to the 0.3% monthly increase analysts predicted, and far better than the 0.1% increase we saw between July and August. Excluding cars and gas, sales across the board increased 0.7% last month. Resilient consumer spending is a positive sign for economic growth, and while Fed rate cut expectations were little moved by Thursday’s report, the figures help cement odds that we just may get a soft landing after all.

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