Prediction Markets Failed Badly on Brazil's Presidential Election

Prediction markets like Polymarket were significantly wrong about Brazil's presidential election, where Luiz Inácio Lula da Silva defeated Flávio Bolsonaro in a runoff on Sunday, despite the platform giving Bolsonaro an 81 percent chance of winning that morning. Polymarket odds had favored Bolsonaro at over 80 percent after the first round on October 4, with Lula's chances bottoming out at 12 percent. Official results showed Lula winning 51.8 percent to 48.2 percent, while over $62 million in bets were placed on Bolsonaro. The miss contrasts with Polymarket's accurate prediction of Donald Trump's 2024 victory, raising questions about its credibility. Critics note that wealthy bettors can distort odds, and the platform faces another test during the November midterm elections.