A recent analysis by blockchain data provider Bitquery revealed that a strategy of consistently betting on the favorite in the Polymarket prediction market for every 2026 US primary election would have resulted in a loss of 4%. Despite the fact that these favored candidates won 87% of the time, the study highlighted the importance of not only predicting the winner but also assessing whether the price of the contract is worth it.
According to Bitquery’s findings, the candidate with the highest reference price emerged victorious in 238 out of 273 Senate, House, and governor primaries. However, a hypothetical approach of placing $1 on each favorite at the reference price led to a loss of four cents per dollar.
The analysis also revealed that candidates priced at 90 cents or higher won 177 out of 182 races, indicating that the strongest favorites significantly contributed to the overall accuracy rate. On the other hand, favorites priced between 50 and 90 cents had a 71% success rate despite an average price of 77 cents.
One key takeaway from the study is the impact of outcome shares on potential profits. Investing in an expensive favorite may yield minimal returns in the event of a win, while a losing share could result in a complete loss of the initial investment. Therefore, it is crucial to consider the balance between correct predictions and financial returns.
Bitquery’s methodology involved averaging trades within 24 hours before the voting day deadline, with fallback prices used in cases where no recent trade was available. However, the study did not address potential factors such as spreads, slippage, or fees, which could influence the actual returns on investment.
Overall, the analysis excluded nine markets due to various reasons and focused on primary elections across all 50 states using Polygon trade data. As the November prediction markets approach, the distinction between forecasting and pricing becomes increasingly important, especially considering the differences between primary and general elections in terms of funding and polling data availability.
