This week in prediction markets
All eyes on Musk’s tweets – and his future as Tesla CEO
Trump’s chance of a conviction are higher than his polling numbers
CFTC meeting to discuss potential ban on political betting
Tesla was the first company to scale electric vehicles and bring them to the mainstream.
There have been challenges along the way, and Tesla’s critics say its founder Elon Musk is an impediment to its success with his erraticism and obsession with posting on his social media platform X, formerly Twitter.
Now, Tesla faces an existential threat. Sales and profits are falling, competition is increasing, particularly from China, and drastic cost-cutting measures include staff reductions and simplified car builds. As Tesla struggles with market pressures, leadership and strategic challenges persist, raising concerns about the company’s direction and stability.
Nevertheless, the market thinks Musk will likely stay on.
On Kalshi, the regulated U.S. prediction market platform, “yes” shares in “Elon Musk out as Tesla CEO this year?” are trading at 12 cents, meaning bettors are giving a 12% chance of a change in leadership by Dec. 31. Each share pays out $1 if the prediction comes true, and zero if not.
At the same time, Tesla deliveries look to be stable, the market believes, and there’s a 52% chance the company will ship over 400,000 vehicles this quarter, an increase over the “disaster,” per analysts, of the last quarter when it only shipped around 386,000.
Meanwhile, nothing is going to get between Musk and his X account.
On Polymarket, the crypto-based prediction market that operates everywhere except the U.S., bettors are predicting that he’ll tweet (excuse us, post) 75 to 104 times from May 3 to May 10, with outlier money predicting it’ll go all the way to 120.
If only there were a way to correlate Musk tweets to the performance of his companies the same way his tweets send memecoins to the moon.
Former U.S. President Donald Trump faces four legal battles as he runs for re-election, and the market thinks he will almost certainly be convicted before election day – but likely not spend any time in prison.
Currently, Trump is on trial for 34 felony counts of falsifying business records to conceal a hush-money payment made to the adult film actress Stormy Daniels during the 2016 election, allegedly to protect his presidential campaign from scandal.
Aside from that, Trump faces court cases involving allegations he conspired to overturn the 2020 election results related to the Jan. 6 riot on Capitol Hill, mishandling of classified documents, and a racketeering case in Georgia involving a phone call to the state’s top election official to “find 11,780 votes.”
For anyone else, this would be an extraordinarily serious situation that would certainly result in jail time, but this is Teflon Don we are talking about.
Currently, Polymarket bettors give a 76% chance that Trump will be convicted before election day.
This is up from 57% in late March when the contract was initiated, and Trump’s hush money trial kicked off.
But will he spend any time behind bars? Probably not – which puts the market in alignment with legal experts – though bettors have slowly changed their position on this, ever so slightly.
Right now, there’s a 17% chance the former President will spend any time incarcerated prior to Election Day.
The outcome of the various charges Trump faces range from fines, probation, to the possibility of significant jail time specifically for the mishandling of classified documents and the RICO charges brought in Georgia. Prison time, legal experts have written, is going to be a last resort considering the logistical challenges and the implications of incarcerating a former president who might also be an election candidate.
But will any of this benefit incumbent president Joe Biden?
Probably not.
On Polymarket’s general election contract – which currently has over $120 million bet – Trump’s chances have edged up over the last week to 47% from 44% while Biden’s have remained flat.
The Commodity Futures Trading Commission is set to meet on May 10 to discuss a potential rulemaking forbidding political bets.
The U.S. regulator is in the midst of a lawsuit involving Kalshi, which is suing the CFTC for rejecting its proposal to list derivatives that allow betting on elections. This legal battle follows a precedent set by Clarke v. CFTC, where the Fifth Circuit Court ruled against the CFTC’s revocation of U.S. election betting site PredictIt’s no-action letter, potentially influencing the outcome for Kalshi and its efforts to establish large-scale political betting markets in the U.S.
Given that the U.S. is about to enter into a hotly contested and acrimonious election, Kalshi and other platforms have a big interest in being able to operate prediction markets legally stateside. Looking at the massive amount of money parked in Polymarket’s election contracts – which has crossed the $120 million mark – it is clear this is something the market wants.
Pollsters were critically wrong about the 2016 election and 2020 elections, when they significantly undercounted the Trump vote. They also got the 2022 red wave wrong. Given the size of the Polymarket pot – perhaps larger than the revenue a polling firm brings in every year – one would think there will be a degree of accuracy not yet seen in prior elections.
But presumably this money is not American, because Polymarket is not allowed to serve U.S. persons under a settlement with the CFTC. Would the numbers look different if it were a Kalshi contract?
The CFTC hearing starts Friday at 10 a.m. EDT, and will be streamed on cftc.gov and the agency’s YouTube channel.
