Polymarket is under investigation after the merchant made $50 million in Trump’s victory.
A French businessman “Theo” made a bet of nearly $50M on Trump using the “Neighbor Pick” method on Polymarket. Theo's personal preferences and informal use of information raise transparency concerns. French regulator ANJ is investigating Polymarket's compliance with gambling laws.
Crypto betting platform Polymarket is facing possible regulatory action in France after an anonymous trader, known as “Théo” or “Trump Whale”, made headlines by betting nearly $50 million on Donald Trump's US presidential election victory.
Teo's impressive success has raised questions about predictive market mechanisms, data reliability and the transparency of such platforms.
How did Theo. Betting 50 million dollars on the US presidential election
Theo, a former banker from France, used four Polymarket accounts to place more than $30 million in bets on Trump winning the popular vote. According to an interview with the Wall Street Journal, his strategy revolves around what he calls “neighborhood selection.”
Unlike a traditional poll that directly asks who to vote for, this method asks respondents who they believe their neighbors support. This approach can reveal hidden preferences, especially when voters have difficulty expressing their true preferences.
Neighborhood polls released publicly in September, Toyo cited, showed that support for Vice President Kamala Harris was significantly lower when asked about their neighbors' preferences than when asked directly.
Teo took this as an indication that conventional polls have underestimated Trump's support, making him a high-risk bet when Polymarket odds suggested Trump had only a 40% chance of winning the popular vote.
To bolster his confidence, Teo conducted personal surveys with a major pollster, which reportedly produced “mind-blowing” results in favor of Trump. However, these findings were kept confidential due to confidentiality agreements, raising speculation about the accuracy of the data and its impact on forecast markets.
The National Gaming Authority (ANJ) investigates Polymarket.
The success of Téo Betting has drawn more attention to Polymarket's role in election betting. French authorities, specifically the Autorité Nationale de Jeux (ANJ), are said to be investigating the platform's compliance with local gambling laws.
Although Polymarket operates from the US, it will only allow non-US users to participate following a 2022 settlement with the Commodity Futures Trading Commission (CFTC). The ease with which VPNs can bypass geographic restrictions adds to the regulatory challenge.
Experts are divided on the effectiveness of neighborhood selection. While the method is sometimes superior to conventional surveys, studies show that it can lead to misleading predictions, especially when the public lacks sufficient context or understanding.
Téo's story exemplifies how unorthodox strategies and personal insights can disrupt markets, but also highlights the importance of transparency and regulation as the landscape of prediction markets evolves.
