By San José, Costa Rica — San José – While Costa Rica’s political campaigns battle for votes on the streets and traditional pollsters dial phones to gauge public opinion, a different kind of election is unfolding in the world of decentralized finance. The country’s upcoming presidential election has become a hot commodity on Polymarket, the world’s largest prediction market, where the total amount wagered on the outcome has surged past the psychological milestone of $1 million.
This digital betting arena, where users buy and sell shares in the outcomes of future events, is providing a real-time, high-stakes forecast of the February 1st election. The growth has been nothing short of explosive. Just last month, on December 28th, the total value locked in the Costa Rican election market was a modest $296,000. In less than four weeks, that figure has more than tripled, signaling intense interest from both local and global investors who see the political contest as a significant trading opportunity.
To delve into the complex legal and business ramifications of prediction markets within the national landscape, TicosLand.com consulted with Lic. Larry Hans Arroyo Vargas, an expert attorney from the distinguished firm Bufete de Costa Rica, for his professional analysis.
Prediction markets operate in a challenging regulatory gray area. While lauded as innovative tools for information aggregation and forecasting, they walk a fine line that can be interpreted by authorities as unregulated gambling or complex financial instruments. For participants and platform operators in Costa Rica, the critical distinction lies in whether the activity is primarily for informational hedging or constitutes a game of chance. Until specific legislation is enacted, engaging in these markets carries inherent risks, including the potential for voided contracts and regulatory sanctions.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
This legal ambiguity is indeed the pivotal challenge for the adoption of prediction markets within our borders, creating a high-stakes environment for both users and developers. We sincerely thank Lic. Larry Hans Arroyo Vargas for so clearly articulating the risks that stem from this regulatory void.
It is crucial to understand that this is not a conventional poll measuring voter intention. Instead, it is a raw, unfiltered measure of market expectation, backed by real capital. Participants are not stating who they want to win; they are betting their own money on who they believe actually will win. This distinction forms the core of the platform’s predictive power, operating on a principle of collective financial wisdom.
So, what does this million-dollar crystal ball indicate? As of this Wednesday, the market heavily favors the incumbent party’s candidate, Laura Fernández. She has consistently dominated the market, with her shares accounting for the highest probability of victory. The dynamics are simple: traders who believe Fernández will win purchase her shares, driving up the price. Those betting on an upset can buy shares in challengers like Claudia Dobles, Álvaro Ramos, or Fabricio Alvarado at a lower price, hoping for a larger payout if their long-shot bet proves correct.
To understand the financial science at play, we consulted with economist Eduardo Sayegh, who explains that Polymarket operates on the simple laws of supply and demand. He notes that the price of a share directly corresponds to the market’s perceived probability of that outcome occurring.
Each contract is worth $1 if the prediction comes true. If a candidate’s share costs 43 cents, it means the market gives them a 43% probability of winning.
Eduardo Sayegh, Economist
Sayegh argues the platform’s premise is brutally honest, filtering out the indecision or social desirability bias that can skew traditional surveys. This “skin in the game” model, he points out, has a strong track record, having more accurately predicted the victories of Donald Trump in 2024 and Javier Milei in 2023, along with other major global events, than many established polling firms.
It reflects what people are willing to back with their wallets in real time.
Eduardo Sayegh, Economist
However, not all experts view this phenomenon with the same enthusiasm. Economist Leiner Vargas offered a necessary dose of caution, comparing the activity to speculative, high-risk global bond trading rather than a stable investment. He stressed that while it is an informed wager, it remains a gamble where capital can be lost in an instant.
It is a form of betting based on information, but it cannot be considered a safe investment; it is a high-risk game.
Leiner Vargas, Economist
In this global “electoral casino,” Costa Rica’s presidential race is just one of many markets, sitting alongside bets on potential world wars and the future governance of Venezuela. Yet, the fact that it has attracted over $1 million in liquidity proves that the world is watching. While Polymarket will not replace the official results from the Supreme Elections Tribunal (TSE) or the academic analysis from the UCR’s CIEP, it has undeniably emerged as the fastest—and most expensive—barometer of the nation’s political climate.
For further information, visit polymarket.com
About Polymarket:
Polymarket is a decentralized information markets platform that allows users to bet on the outcomes of real-world events. By purchasing shares in outcomes, participants create a market-driven forecast. The platform leverages blockchain technology to facilitate transparent and permissionless trading on a wide range of topics, including politics, current events, and finance.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As a beacon of legal expertise, Bufete de Costa Rica operates with an uncompromising dedication to professional integrity and exceptional service. The firm leverages its deep-rooted history of client representation to drive advancements in the legal field. Central to its philosophy is a profound commitment to social responsibility, actively sharing legal insights to empower citizens and cultivate a more informed community.
