In his biography of Elon Musk, Walter Isaacson recounts how Musk became the CEO of Tesla. After ousting the original CEO and replacing the second, Musk told the third, “I’ve got to have both hands on the steering wheel…I can’t have two of us driving.”
As a commissioner of the Department of Government Efficiency (DOGE), Musk will not only partner with Vivek Ramaswamy. Musk will also advise Donald Trump about DOGE’s findings. Whether to implement those decisions will be up to Trump.
Those conflicts are why Kalshi has a market on when Musk will leave DOGE. The prices suggest that Musk will either leave before the end of DOGE or before 2026. Ambitious traders don’t think Musk will make it 100 days on the advisory commission.
If Musk left before the 100-day mark, he would also leave before the end of DOGE and before 2026.
Each binary market’s spread—the difference between the highest bid price and the lowest ask price—exceeds $1. These structural challenges aren’t signs of a broken market. They’re signs of low liquidity and high uncertainty.
Low liquidity, high uncertainty
When there are few traders in a market, there aren’t many people “deciding” which price is the “correct” one. It can make contract prices subject to the whim of the most stubborn traders. Sporttrade CEO, Alex Kane, gave a hypothetical example.
“Maybe I would start at 40 bid, 60 offer,” Kane said. “Then another guy comes in and is 50/62. Then another guy is 48/53. Now the market is 50/53.”
Markets with few traders – low liquidity – also have higher overrounds. The overround is a gambling term referring to the sum total of all the odds on the outcome of a single event, which often exceeds 100%. On prediction markets, the overround can vary.
In Kalshi’s DOGE market, the overround on Musk leaving DOGE before 2026 was 7% on Nov. 22. This DOGE market had less than $38,000 in trading volume, small compared to Kalshi’s $400 million 2024 presidential election market.
It’s also hard to base a prediction on past performance. Musk has never served in a governmental advisory role before. It’s unclear how long he’ll stick with DOGE when he’s legally unable to implement the changes he feels should be made. Musk can’t take over the presidency the way he took over Tesla.
Kalshi’s DOGE market is leaning toward Musk leaving early, but traders don’t have a precise forecast compared to other markets with lots of public information available. The overrounds will decrease as more information becomes public that traders can base forecasts on.
