These are data points hungrily consumed not just by campaigns and political analysts but also by a growing population of gamblers who study the races and attempt to make a profit by picking winners, not unlike bettors at horse tracks or Las Vegas-style sports books, or even day traders watching the stock market rise and fall.
While betting on U.S. elections is a thriving business overseas, political gambling has long been banned on the federal level in the United States and no state has sought to regulate it. Instead, election wagering here functions more like the stock market than a sports book, as people buy and sell shares of candidates, whose prices fluctuate with the news. But even as the markets continue to move into the mainstream conversation as the midterms approach, that pursuit is now on shaky ground. Federal regulators are clamping down, weighing whether such markets are actually gaming and whether they serve a public interest, questions that could severely limit the legal options beginning with the next election cycle.
While the die-hards check the markets multiple times per day, federal regulation and renewed scrutiny pose a significant hurdle for gamblers, investors, campaigns and analysts who rely on the markets for research, action, real-time data and entertainment.
“When you tell someone, ‘Yeah, I bet on politics,’ their eyes kind of light up. Like: ‘Wait, is that a thing? Is that a joke? Is that even legal?’ ” said Alex Keeney, who co-hosts the “Star Spangled Gamblers” podcast.
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While some players are casual hobbyists who like to put a few dollars down on their preferred candidates, many others operate as day traders who aggressively move money around, looking to invest when a candidate is selling low and cashing out when that candidate’s value might be peaking. There’s already been plenty of money wagered on the 2024 U.S. presidential election, where former president Donald Trump is the heavy favorite to win the next presidential election in the betting markets — but the adventurous also can wager on long shots such as Kanye West and Dwayne “The Rock” Johnson.
“It’s fun,” said John Phillips, chief executive of PredictIt, which had been one of the leading election markets but now faces a government-mandated shutdown. “It’s a really engaging way to reward yourself — or, if you’re less fortunate, reward others — for accurately forecasting political events. We like to think it’s an antidote to fake news. You know, if you place your bets based on fake news, you’re going to lose your money. So it really sharpens the mind and allows you to somewhat divorce emotion from fact.”
Seasoned bettors cast aside their political leanings and obsessively follow headlines and news reports for insight. In the election markets, traders can typically buy a share of a candidate, priced between 1 and 99 cents. Like stocks, investors want to buy low and then unload when the value is much higher. Alternatively, they could hold onto the shares until after Election Day and get paid out $1 per share for a winning candidate. So if a trader bought 100 shares of Herschel Walker, the Republican candidate for U.S. in Georgia, at 60 cents per share this week, that $60 investment would be worth 100 dollars if Walker ultimately wins the race over incumbent Sen. Raphael Warnock (D).
Those with money in the market, of course, will bet on either party, and most will cash out many times before Election Day arrives. Unlike in sports betting, there is no oddsmaker or algorithm setting the odds. Buyers and sellers set the market price.
“This cycle I’ve made most of my money just by seeing like, ‘Oh, wow, people are upset about inflation; bet this is going to be good for the Republicans,’ ” Sweeney said, “and I’ll kind of ride that. And then at a certain point, you start to think, ‘Well, it can’t get worse for the Democrats, so let’s sell all those shares and start betting on the Democrats.’ The best traders are flipping sides frequently.”
Political observers study the ever-changing markets to assess candidates’ chances of winning. While traditional polling data might gauge voter sentiment from a specific period in the recent past, researchers say the betting markets offer more of a real-time snapshot as bettors react to events, endorsements and gaffes. The markets are used by campaigns, political scientists and academics alike, and are increasingly cited in mainstream media political coverage, another valuable tool for analysts such as FiveThirtyEight′s Nate Silver.
“What I think they’re very valuable for is taking the uncertainty about a future event and expressing it in the present time: What does this mean for today?” said Harry Crane, a statistics professor at Rutgers who has written studies on the predictive nature of betting markets. “You can see this event happen, and then immediately the market moves.”
For example, in the U.S. Senate race in Pennsylvania, Mehmet Oz (R) was trading at 53 cents on the PredictIt exchange before his debate last week with John Fetterman (D), who was trading at 50 cents. The day after the debate, Oz’s price shot up as high as 66 cents and Fetterman’s fell to 37.
“I didn’t even watch the debate,” Crane said, “but it would appear that Oz was better than expected or Fetterman was worse than expected or a combination of both to the point where the market moved so much in Oz’s direction.”
Democrats fear the midterm map is slipping away
Betting markets in the United States have seen a surge in activity and popularity in this election cycle, but government regulators have effectively upended the industry two years ahead of the next presidential election. PredictIt has operated since 2014 under a “no-action relief” letter from the Commodity Futures Trading Commission. The site had about 22,000 traders before the 2016 U.S. presidential election but now has more than 177,000. PredictIt is ostensibly an academic research project, owned by a New Zealand university and run by a for-profit company called Aristotle Inc. The CFTC rescinded its no-action letter in August, saying the university “has not operated its market in compliance with the terms of Letter.” It did not reveal how the terms were violated, and a CFTC spokesman did not respond to a request for comment.
PredictIt was ordered to wind down its business by Feb. 15 and responded by filing a lawsuit against the CFTC and requesting a preliminary injunction in a case that’s pending in U.S. District Court for the Western District of Texas. In legal filings, the CFTC has said the “the 2014 letter was not a license, never determined that PredictIt complied with U.S. law, and did not grant a legal right to do business.”
The CFTC has said in past rulings that commercial political markets “involve gaming” and “are contrary to the public interest.” The CFTC this year levied a $1.2 million fine on a similar exchange called Polymarket for offering political options, and last week staff recommended the commission reject an effort by a New York-based start-up called Kalshi to operate a regulated political exchange. That decision could doom the hopes of others looking to launch similar efforts — and send bettors and investors looking for other outlets.
The uncertainty has grabbed the interest of traders, academics and political observers who all rely on the markets for different reasons. Jason Furman, a Harvard economist who served as chairman of the Council of Economic Advisers under Barack Obama, wrote a letter to the CFTC in support of Kalshi’s application, saying the White House “would regularly refer to prediction markets on electoral outcomes and specific events to help inform our understanding of how political and economic developments would affect economic policymaking.”
While PredictIt’s case sits before a federal judge, Phillips said he’s hopeful the exchange will continue to play a role in political discourse and its community of traders will be able to put their money behind candidates.
“We’re going to emerge from this no matter what. This isn’t going away,” he said. “That’s one of the ironies of this half-baked effort to shut PredictIt down. If PredictIt is not in existence, this is all just going to go offshore. And then there’s no research value, there’s no consumer protection, there’s no forecasting value.”
Traditional sportsbooks are also keeping an eye on regulatory matters. There’s potentially a lot of money to be had. The U.K. books have for years offered odds on U.S. elections, and an estimated $1 billion was wagered on the 2020 presidential election. Betfair, Europe’s largest betting operation, alone saw more than $630 million in political wagers during the cycle.
Much of the traditional political gambling in the United States is done through illegal bookies or offshore operators who aren’t subject to American regulators, such as BetUS and Bovada.
“The U.S. has what I would consider very archaic laws on gambling,” said Paul Krishnamurty, a U.K.-based political handicapper who co-hosts the “Get Out the Bet” podcast. “I find it really odd and hypocritical. Look, Americans are betting on this stuff. The offshore industry is massive, and Americans who come to Britain for holidays bring a large sum of money with them because they want to place a bet on the presidential race.”
As more states have legalized sports gambling, sites have tried to vary their betting options, hoping to expand and diversify their audiences. DraftKings, one of the biggest U.S. sportsbooks, is able to post odds on the Oscars in some states and even has had offerings on the Fourth of July hot dog eating contest. While politics is completely off the board at its U.S. sites, DraftKings does offer a variety of U.S. election odds through its Ontario operation.
Canadian bettors can put money on Mark Zuckerberg winning the Democrat nomination for president (50-1) or Ivanka Trump becoming the Republican nominee (40-1). George Clooney is listed at 100-1 to win the whole thing, slightly lower than Joe Rogan, Paul D. Ryan and Rand Paul (all 150-1) but not as good as Jeff Bezos and Alexandria Ocasio-Cortez (both 65-1).
At 3-1, Trump is DraftKings’ listed favorite for the 2024 election, followed by Ron DeSantis (+330), Joe Biden (+500), Kamala Harris (+1,200) and Mike Pence (+1,800). Among the names lower on the list: Michelle Obama (+3,500), Dwayne Johnson (+4,000), Mike Pompeo (+5,000), Hillary Clinton (+5,000) and Tucker Carlson (+6,500).
Will those kinds of odds ever be an option for American bettors, available on the mobile sports betting apps that have proliferated since the Supreme Court ruled in 2018 that states were free to establish their own sports gambling laws? Johnny Avello, race and sports operations director for DraftKings, pointed out that sports betting was largely outlawed in this country until 2018; it’s now legal in 30 states plus the District of Columbia, and last year it was estimated as a $74.2 billion industry, according to Vantage Market Research.
“I think it’ll happen at some point,” Avello said. “I don’t know when, but we’re going to be certainly ready for it if we’re given the opportunity.”