The French Polymarket Whale Is Not Trying to Manipulate the Election

Don't break out the Freedom Fries just yet

The French, Trump-backing Polymarket mega-trader (discussed in the NYT today, which quotes Polymarket confirming his national origin and that he controls the several massive accounts we’ve been tracking) is almost certainly not attempting to influence the outcome of the election. It’s nonsensical to think so and using the story to argue against regulated election market Kalshi in court is preposterous.

Even so, market haters-in-chief Better Markets are using this and other media reports that cite people willing to guess on the record (without offering any evidence) that the French Polymarket whale (la superbaleine, s'il te plait) is ipso facto some form of electoral manipulation, as the rationale for BM's amicus brief urging the D.C. Circuit Court of Appeals to shut Kalshi down.

In other words, Kalshi will be used to manipulate elections, which we know because Poly is being used to manipulate elections, which we know because there is a flurry of reporting that quotes people who say they assume it's manipulation but can't or won’t explain how or why.

Here's something to think about.

If you had let's say $100M to throw away and it was worth at least that much to you to try to influence the election outcome and you decided that falsely inflating Trump's price on the world's largest prediction market was a good way to do that (plausible so far), would you the go to the trouble of creating multiple (at least 5, maybe as many as 7) alt accounts in order to conceal your activity's association with your suddenly famous account, almost exclusively use limit orders to avoid unduly pushing the price even higher lest other traders frontrun you and set up bots to exploit your enormous uni-directional trade, and spread your activity around a few dozen markets that are all approximate proxies for one another?

That all sounds like the behavior of a rational trader trying to build a large position at the cheapest price possible.

If your goal was to manipulate the election by artificially inflating Trump's price, you'd do it in the most ham-handed (from a rational trader's perspective) way possible. You’d stick with the main "Will Trump win" market and you'd just keep smashing the buy button, throwing million after million against the same upside resistance. You'd want people to see what you were doing so they could take advantage of you and hike up their offer prices even further and soak you faster.

Ironically, trading stupidly like that would be more cost-effective for the would-be manipulator. Because his motive isn't ROI (at least in the sense of his expected return per dollar invested), it's how many pennies he can shift the price per dollar invested. And to maximize that, you trade stupidly.

Or at very least, you don’t go out of your way to minimize the price impact of your trading.

Better Markets likely recognizes this and doesn't care. Prediction markets are their bête noire and the superbaleine is a handy cudgel with which to fearmonger about horribles that just ain't horriblin'.

If you're interested, you can learn lots more about the mysterious Frenchman behind the big accounts on our Fredi Tracker.