The Ballon D'or, arbitrage, and profiting from emotions
Politics and sports. Two places that are ripe for emotionally-driven mispricing opportunities courtesy of Polymarket.
For those that don’t know, Polymarket is a crypto-driven ‘prediction-market’ whereby the odds are set by the market. i.e no ‘house’.
A friend suggested I take a look, given the most liquid markets are politics and sports, mispricings are extremely common.
See below - Trump is heavily favoured on Polymarket however this is the most liquid market on the platform and the odds are similar at traditional betting houses (e.g $1.53 for Trump, similar to the odds below).
There are clear opportunities to profit as shown below.
Take the Ballon D’or market (Best Men’s Footballer of the Year). The odds were completely out of whack between betting platforms and Polymarket.
I could bet on Vini Jr to win at ~$1.44 whereas he was heavily favoured on Polymarket at 93% ($1.08). There was a clear arbitrage opportunity here.
A $100 bet was sized into:
Ladbrokes - $91 at $1.44 for Vini Jr to win paying $131.04 was paying $131.04, a 44% return
Polymarket - $9 at $14.29 for Rodri to win paying $114.32, a 1329% return.
….
This can be be scaled up depending on the liquidity of the market.
Proof that I’m betting against ‘dumb money’ was revealed October 28, when the odds for Vini Jr fell from 96% → 88% after Madrid were thrashed 4-0 by Barcelona.
The casting votes for the Ballon D’or are due weeks prior to the award being announced so they can be counted in time.
The odds shifting materially for a non-event shows you that the counter-party does not know what they’re doing.
Given Musk has promoted Polymarket the mispricings generally always favour pro-MAGA outcomes.
Regarding the leave of absence on stocks; I shall be back posting again soon!