Polymarket’s Pope Prediction Market Sees Bettors Lose Millions as Edge Diminishes

Polymarket, a popular crypto-based prediction platform, has gained attention for its ability to beat traditional bookmakers in predicting major events. However, this reputation was called into question on Thursday when bettors on the platform failed to predict the outcome of the papal conclave, leading to significant losses.

Robert Francis Prevost, the surprise winner, was not among the top contenders. In fact, bettors gave the U.S.-born cardinal only a 1% chance of being selected as pope. Cardinal Pietro Parolin, who had the highest odds at 28%, was seen as the favorite to succeed Pope Francis.

With over $28 million in bets placed on candidates other than Prevost, the result led to substantial losses for many Polymarket bettors, raising concerns about the accuracy of prediction markets like Polymarket when compared to traditional polls.

Polymarket operates differently from conventional betting platforms. While traditional bookmakers set the odds based on research, Polymarket’s odds are driven by the collective bets placed by users in real time. As more bets are placed on a particular outcome, the odds rise accordingly, reflecting the consensus of the market.

The platform gained widespread attention during the 2020 U.S. presidential election, where Polymarket bettors predicted Donald Trump’s chances of winning with greater accuracy than traditional polling sources. Experts praised Polymarket for its real-time insights and market-driven approach, suggesting that it provided an edge in predicting outcomes.

However, the papal conclave result highlights the challenges of predicting rare, opaque events. According to Domer, one of Polymarket’s top pseudonymous bettors, the papal election is difficult to forecast due to its unpredictability and lack of clear data. “It’s like trying to predict an event with almost no public information,” he said. “Even those inside the conclave wouldn’t have a clear picture of what’s going to happen.”

This uncertainty likely led many Polymarket bettors to rely on traditional betting markets and media coverage, which may have skewed the odds on Polymarket toward candidates like Parolin and Tagle, whose media presence and public popularity inflated their chances.

The rarity of papal conclaves, with the last one occurring in 2013, also posed a challenge. Since Polymarket bettors likely had little experience betting on such events, they may have lacked the necessary insight to predict the outcome accurately. Political elections, on the other hand, are far more common and generally easier to gauge.

Domer pointed out that the real edge in betting on the papal conclave may not have been choosing the winner but rather betting against candidates with inflated odds. “The odds for Parolin and Tagle were set too high because of media hype, not because of any real insight into the event,” he explained.

In the wake of this misstep, the papal conclave result raises important questions about the reliability of crypto-based prediction markets. While Polymarket has excelled in more common events, it remains to be seen how well these platforms can predict highly unpredictable and rare occurrences.