With Joe Biden having formally entered into the race for the White House last week, the odds markets on a Trump re-election have undergone some revision – with one consequence being the opening up of some strong arbitrage opportunities between a number of Wisdom-of-the-Crowd trading platforms.
UK-based Smarkets is currently quoting a Donald Trump 2020 re-election at odds which imply a probability of re-election at 43%, whereas New Zealand-based platform PredictIt is pricing the same outcome at 40 cents (implied probability 40%), presenting some opportunity for real-time arbitrage traders between the two platforms.
However, for tech-savvy punters who possess crypto assets, the opportunity for arbitrage is even greater again. Wisdom-of-the-Crowd crypto gambling platform Augur is currently seeing trading on a second Trump presidency at odds of 50%, offering an astonishing 10% arbitrage opportunity with PredictIt and a 7% opportunity with Smarkets.
However, whilst these differentials are large when compared to the majority of arbitrage opportunities that generally present themselves on predictive markets, there is a caveat: stakes (and thus potential winnings) in crypto are subject to the extreme volatility of pricing on the crypto markets – and bring significant risk to the potential value of future winnings, particularly for a market which is not expected to close for at least another eighteen months.
Crypto gambling currently represents an extremely small fraction of gambling activity world-wide but, according to some analysts, may be set to re-define the industry over the next ten years.