Can the market predict an election before pollsters and the electoral authorities?

On June 7, Peru held its presidential runoff election between Keiko Fujimori and Roberto Sánchez. With more than 18 million votes cast, this election has become one of the closest in the world in recent years.

While pollsters were speaking of a statistical tie, traders on Polymarket assigned nearly a 96% probability of victory to Keiko Fujimori before any official proclamation had been made. The market generated close to US$98 million in trading volume related to the outcome of the Peruvian election.

In prediction markets, ideology pays no dividends, bias is costly, and intuition without evidence is punished. Everything ultimately comes down to probabilities, incentives, and analysis.

As Charlie Munger famously said: “Show me the incentive and I will show you the outcome.” When millions of dollars are at stake, the incentive is simple: be right. That is why prediction markets sometimes appear to move ahead of political analysts. Money does not guarantee the truth, but it often demands stronger arguments.

This phenomenon, however, raises an important legal question. Regardless of the label attached to them—whether prediction markets or event-based wagering—the reality is that public money is being committed to uncertain outcomes, and participants have a clear financial interest in the result. At this scale, the discussion ceases to be merely technological or financial and also becomes a regulatory matter.

Regulation should not be understood as the prohibition of risk, but rather as a mechanism to ensure transparency, market integrity, and the protection of those who participate in these activities.

Facts often move faster than the law. What matters is that the law does not arrive too late. Prediction markets are no longer an academic hypothesis or a technological curiosity; they are now an undeniable reality. The real question is whether regulators will choose to understand them or ignore them. Previously published in: https://www.linkedin.com/posts/carlos-fonseca-sarmiento-815a4944_can-the-market-predict-an-election-before-share-7470833837791596545-3o98/?utm_source=share&utm_medium=member_desktop&rcm=ACoAADITQqkB2Qd6mxW6dpSplPX8S-gVU93z3y4