Editor's Note: This article discusses the complex situation and arbitrage opportunities that Polymarket platform may face if Trump loses the election. The article assumes that after AP, Foxnews, and NBCNews announce Trump's defeat, the market may enter a "double dispute" phase. The author believes that arbitrage opportunities will arise during the dispute period, and points out that if Foxnews does not announce the election result, it may make the situation even more chaotic. The article reminds that this is a hypothetical discussion and looks forward to insights from industry insiders.
Original Content (edited for readability):
If Trump loses the election according to market rules, it means there will be reports from AP, Foxnews, and NBCNews confirming his defeat. I expect the Polymarket US presidential election market to go through a full "double dispute", and retail investors chasing 100x bets may get badly hurt as they expect the market outcome to be reversed.
In other words, if the US presidential election market ends with Trump's defeat, the market will go through two disputes, and retail traders will try to make risky bets, hoping the dispute may overturn the outcome. You're no Tom Brady...
If Trump loses the election, TRUMPYES holders will certainly not give up easily, especially compared to HARRISYES holders. However, rules are rules, and @Polymarket reminds you of the consequences if this happens.
Market Rules:
Dispute Mechanism
Anyone can dispute the result within about a day after the market is resolved, by staking $750 on the UMAprotocol. This is a drop in the bucket for the platform's liquidity, and traders can submit up to two disputes before the market is finally resolved.
Here is an example of a "double dispute" that was overturned (these examples only show what a disputed market looks like).
Rules Explanation and Arbitrage Opportunity Analysis
According to the rules: all news outlets must confirm the election result. Based on Polymarket's past dispute precedents (the results of past disputed markets), I predict the market will enter a "double dispute" phase, and the UMA token whales (UMA voters) will ultimately determine the result as "Trump's defeat".
Illusory Arbitrage Opportunities
During the dispute period, I expect some arbitrage opportunities to arise, as some holders will try to seize the possibility of the market outcome being reversed, pursuing a 100x payout (betting 1% on TRUMPYES, which could yield 100x return if the result is reversed).
During the dispute period, the market may start pricing TRUMPYES at 1%, TRUMPNO at 99%, and as aggressive deposits come in, the price gap may widen further (creating arbitrage opportunities).
These prediction markets are like gambling machines... People will say "there's a 100x chance, why not bet a little", and some will be more confident to put in a lot of money. The result may "hurt" people... I won't go for the 100x bet, but rather prefer to bet at 99% odds, as the dispute period should ultimately end with "Trump's defeat".
Note: There may also be cases where the arbitrage opportunities remain narrow, as the "100x bettors" cannot single-handedly move the market price.
In a recent market where "RFK will exit on Friday", the YES side once dropped to 96% during the dispute period after resolution. Veteran Polymarket players (OGs) familiar with the dispute mechanism were able to capture a 6% arbitrage opportunity, which is one of the inherent features of the market rules.
Timing Judgment and Prediction Premise
My prediction can be realized if: AP, Foxnews, and NBCNews all announce Trump's defeat.
If this happens, the situation will become extremely interesting. If FoxNews chooses not to announce the election result, in support of Trump's position, things will get quite complicated, and I'm not sure if there are any precedents for this. But if this does happen, it will truly be "exciting".
Sympathy and Hypothetical Analysis for Polymarket
I sympathize with Polymarket, because if any of these hypothetical scenarios occur, the situation may become (cannot be emphasized enough) chaotic, and a large amount of capital will be affected. Again, this is just a hypothetical consideration based on multiple variables, with the aim of stimulating thought, so please view it from this perspective.
Let the game begin
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