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In the days leading up to the US election, the polls had the race deadlocked. The vote was essentially a sheet of currency.

But over betting platform Polymarket, the odds were much more solidly in former President Donald Trump’s favor. On Monday, Trump led Vice President Kamala Harris 58 percent to 42 percent — a lead that Wednesday morning turned out to be a much more accurate reflection of reality.

For free market purists, the success of betting sites like Polymarket, Kalshi and PredictIt comes as no surprise. The basic theory behind prediction markets is that lots of people with money on the line can predict an outcome better than any expert. Even if those people are not well informed, the collective wisdom emerges from everyone’s aversion to losing money.

“Financial markets are generally quite efficient, and the evidence suggests that the same is true for prediction markets,” Eric Zitzewitz, a professor of economics at Dartmouth, tells me. “There is no virtue signaling in an anonymous market when you bet.”

How it works: You can log into almost any of these sites (technically US bettors are not allowed to trade on the cryptocurrency-powered Polymarket) and bet on the outcome of any event. The presidential election was a popular market, but are there many others like, will Taylor Swift and Travis Kelce break up in 2024? (A 12% chance, Polymarket punters.) Or, will America ban TikTok this year? (Very unlikely at 3%). Who will win the Super Bowl? (The Chiefs are currently the favorite with a 19% chance, followed by the Lions at 17% and the Ravens at 13%).

Essentially, you are buying a stock linked to a certain outcome. Shares trade between $0 and $1, and once the event is resolved, shares tied to the correct outcome pay one dollar. If you bought Trump shares on Monday when they were 58 cents, you can expect to make 42 cents on the dollar.

And in the case of a Polymarket trader known as Fredi9999, who bought millions of Trump shares, the payday is expected to net $85 million, according to Bloomberg.

The emergence of the so-called Trump whale has sparked intense scrutiny of Polymarket over the past few weeks, as it certainly seemed possible that an anonymous investor with deep pockets was trying to manipulate the market and swing favorability in Trump’s direction. How accurate could the predictive power of this platform be if a single fan can go all-in and skew the odds?

Polymarket CEO Shayne Coplan addressed those concerns in an interview with CNBC on Thursday.

“If somebody takes a really big stand on Trump … there’s somebody on the other side, a counterpart,” taking a big stand on Harris, Coplan said. “When you see the quotes on Polymarket, it’s not a function of how much money has been placed by either side, it’s a function of the market price at that time. … Some trades that someone made two weeks ago have nothing to do with the market price right now.”

Zitzewitz also noted that large price movements tend to attract people’s attention.

“If prices are really distorted from what they should be, then it’s profitable to take the other side,” he said. “Maybe I can’t bet the whole other side of a guy with $20 million, but me and 1,000 other people can.”

Historically, betting markets have been pretty good at predicting the outcome of US elections. A study showed that in the 15 elections between 1884 and 1940 the highest-rated candidate since mid-October has won 11 times. (The same study notes that electoral betting fell out of favor after 1940 as scientific polls became more sophisticated and reliable.)

But like polls, prediction markets are far from perfect.

In 2016, bookies told the British public that the smart money was largely on the UK rejecting “Brexit” and staying in the European Union. Later that fall, popular betting market PredictIt gave Hillary Clinton an 82 percent chance of defeating Donald Trump.

Looks like the smart money was wrong. Britain was very much Brexit and Clinton lost very much.

Those kinds of big misses mean the Nate Silvers and Ann Selzers of the world probably won’t be out of a job anytime soon.

Still, I asked Zitzewitz what a market can tell me that, say, the FiveThirtyEight polling average can’t.

At its core, he told me, FiveThirtyEight reflects one person’s approach to turning data into probability. The markets look at the same polls and turn everyone’s interpretations into a probability.

“What you see with the market is an average of all these different opinions, weighted by their willingness to put their money where their mouth is.”