Retail bias or thin liquidity? Polymarket’s Brazil odds face scrutiny

Polymarket predicted Luiz Inácio Lula da Silva had about a 20% chance of winning the Brazilian election. However, Lula won on Sunday despite his low odds, a blow to the prediction market world that raises questions about the real determinants of prediction odds. The left-wing Lula managed to defeat his right-wing opponent Flávio Bolsonaro in a second round of voting. The second round was needed as Bolsonaro was leading the first one in October but couldn’t gain a majority. This time, Lula managed to secure a majority of votes. Prior to the voting, Polymarket predicted Lula’s chances of winning at 20% while Bolsonaro’s stood at around 80%.

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