Leading up to the Netherlands’ election on Oct. 29, Polymarket traders were confident that Geert Wilders’ nationalist Partij voor de Vrijheid (Party for Freedom) would secure a win.
Despite Rob Jetten’s social liberal Democraten 66 (Democrats 66) climbing in all major polls, the market showed little response. However, just minutes after the first exit poll, D66 odds skyrocketed from 5% to 100%, erasing millions in overconfident PVV bets.
With 98% of the votes counted, D66 and PVV were both forecasted to secure 26 seats in the 150-seat lower house of parliament, as reported by Reuters on Thursday. This marked an 11-seat decline for PVV.
Kalshi performed similarly, as traders consistently overvalued Wilders’ PVV right up until election day.
Data from Polymarket Analytics indicates that the markets became a test of belief rather than prediction as traders clung to failing PVV positions due to conviction. Many maintained unchanged bets for weeks, while a minority of data-driven participants capitalized on the late D66 surge.
During the last U.S. presidential election, various theories emerged regarding why Polymarket favored then-President Donald Trump. Some speculated it was due to the involvement of crypto investors, who are often right-leaning.
One theory suggested that foreign funds aimed to sway the vote by influencing market trends. This notion was heightened when a French individual, operating under the name “Theo,” distributed pro-Trump and pro-Republican bets across multiple accounts.
However, Theo revealed to the Wall Street Journal that he had no political motives. Instead, the wealthy banker identified gaps in national polling and commissioned his own survey, where pollsters asked respondents about their predictions for their neighbors’ votes.
This survey supported his viewpoint that the polls underestimated Trump’s likelihood of winning, prompting him to invest $30 million.
In contrast, the Dutch election lacked a figure like Theo. Numerous conviction traders acted as effective counterparties, providing exit liquidity.
Accounts such as “WhiteLivesMatter” — whose username reflects their beliefs — invested significant amounts into PVV “yes” contracts without hesitation, even as Ipsos and Peil.nl polls shifted firmly towards D66.
The positions remained static for weeks, as noted by Polymarket Analytics. It was not a lack of information that led to their downfall, but a refusal to acknowledge it.
This static approach sharply contrasted with traders like “Wisser” and “ciro2,” who acted swiftly on the latest polling data, reaping six-figure profits from the same volatility that impacted PVV supporters. These traders utilized the market rationally, aiming to profit from trades, rather than treating it as an ideological scoreboard.
Ultimately, the prediction markets functioned as mirrors rather than predictors, showcasing the biases of their users. While Theo utilized polling to challenge the consensus, some traders completely disregarded it.
In a market characterized by thin liquidity, the outcome became a real-time experiment demonstrating how markets can be rational in theory yet irrational in practice, particularly when conviction overshadows curiosity.
Read more: Polymarket is 90% Accurate in Predicting World Events: Research
