It appears that Polymarket functions as a crystal ball, able to forecast certain events with almost 90% accuracy, based on a Dune dashboard created by a data scientist from New York City, Alex McCullough.
McCullough analyzed Polymarket’s historical data, excluding markets with probabilities exceeding 90% or falling below 10% after the outcomes became known but before they were settled, ensuring the analysis remained precise, as outlined in a summary from Dune.
The research indicates that Polymarket tends to slightly overestimate event probabilities across most categories, possibly because of factors like acquiescence bias, groupthink, low liquidity, and a tendency among participants to favor high-risk wagers, according to McCullough’s findings.
Longer-term markets, which require bettors to evaluate distant events, tend to exhibit greater accuracy, containing outcomes that are evidently improbable, thus making predictions simpler, as McCullough elaborated in an interview.
As an illustration, he pointed out the market for Gavin Newsom’s presidency (which had $54 million in volume) during the last election cycle, noting that these long-term Polymarket predictions often encompass outcomes that are quite predictable, such as Newsom clearly not securing a victory, which enhances the accuracy metrics for these forecasts.
On the contrary, head-to-head sports markets, which have fewer extreme results like long-shot candidates in presidential races and a more balanced outcome distribution, provide a clearer gauge of predictive accuracy, as indicated by McCullough, showing significant improvements in accuracy as events proceed and exhibiting occasional spikes in accuracy.
The sports sector is rapidly expanding for Polymarket, with nearly $4.5 billion in total volume wagered on outcomes from the NBA, MLB, Champions League, and Premier League finals.
McCullough’s insights regarding Polymarket’s predictive accuracy may be particularly relevant in Ottawa, where Polymarket indicates that the newly elected leader of the Liberal Party of Canada, Mark Carney, has a noticeable advantage over his Conservative opponent Pierre Poilievre, surpassing even the figures provided by poll aggregators.