Kamala Harris is now favored to win the presidential election on the PredictIt prediction market.
Prediction markets in the United States have in general demonstrated more confidence in the vice president’s bid for the presidency than global sportsbooks.
But she’d never been the favorite. That changed on July 31, as the price of a ‘Yes’ Harris win bid reached a new high at 54 cents. Backing a Donald Trump win costs 50 cents. Whether the change reflected Trump’s contentious interview at a National Association of Black Journalists conference on Wednesday is unclear. But the tastes of the speculators are.
Wagering on elections is illegal in the US, but remains regulated and immensely popular in many countries, including parts of Canada. Speculating on the Harris-Trump matchup — and myriad other political contests — is therefore left to exchange markets, where customers buy and sell bets like stocks.
While Trump remains a favorite at sportsbooks outside the US, Harris’ recent momentum seems to be affecting prediction markets in the country. She trails there, too, but has narrowed the gap.
Prediction Markets on the US Presidential Race
Harris had been trending upward this week at PredictIt. A “Yes” selection for Trump winning the election was priced at 53 cents on Aug. 3 and a “No” was at 47 cents. A Harris win was priced at 49 cents, a “No” at 52 cents. Harris has remained close to the former president and convicted felon since she became the presumptive Democratic nominee, with her nearest approach at 53-50 on July 28.
At Smarkets, which operates a political betting exchange and licensed sportsbooks in Indiana and Colorado, speculators were more bullish on Trump. At that site on Tuesday, Trump’s implied odds were being bought at around -147 (an implied probability of 59.5%), with Harris at +152 (40.9%).
Harris stop at 53-50 on Aug. 6 after announcing Minnesota Gov. Tim Walz as her running mate.
What the Sportsbooks Say:
Several legal sportsbooks in Ontario had posted multiple presidential markets throughout the Joe Biden-Trump contest but took them down in mid-July. Harris was a +4000 pick at DraftKings in Ontario in April.
bet365 in Ontario had Trump at -130 and Harris at +130 this week.
A gloss of legal UK markets had Trump at -143 and Harris at +158 on Tuesday.
Betting on US Politics Older Than US Itself
Political wagering immigrated to North America from England — where it remains popular and legal — and wasn’t outlawed in the US until just before World War II. Viewed by many academics as the only socially redeemable form of gambling, political betting proved to be an accurate form of polling before firms like Morning Consult existed. These liquid markets were also at times susceptible to manipulation by influence-peddlers, but have compared well versus polling in terms of their accuracy.
According to “The Long History of Political Betting Markets: An International Perspective” by Paul W. Rhode and Koleman Strumpf, a common maxim of English politics in the 1800s was “bet or be silent.”
One political observer noted in the paper:
“As far back as the reign of William the Third, foreigners had observed that, on matters great and small, the only sure test of English opinions was the state of the odds.”
The Irish wagered on the outcome of the American Revolutionary War, the Italians on papal conclaves.
Then-FanDuel CEO Matt King advocated for the legalization of political betting in 2019, telling Yahoo! Finance:
“We would love to offer politics. Frankly, we like to offer games that everybody loves to play. Our parent company, Flutter Entertainment, does a huge business on the Betfair exchange with political betting,” he said. “So, the reality is it’s just a question of: Will it be allowed from a regulatory perspective?”
FanDuel opened a political betting market in West Virginia that same year, but state officials halted it, saying the operator misunderstood their refusal.
Said (and said some more) handicapping legend Jimmy Vaccaro over the years:
i am not doing this not to shine my a– but this stuff aggravates me to no end. did an interview with BBC concerning our ELECTION the rest of the world is interested and takes bets but we cant.
— Jimmy Vaccaro (@JimmyVaccaro) September 11, 2020
Prediction markets in the US are governed at the federal level by the Commodity Futures Trading Commission, which is actively attempting to shut down these exchanges. PredictIt, which is operated in the US by political consulting firm Aristotle, remains active because of a court injunction.
A group of US senators reiterated their call on Aug. 5 for a prohibition on bets allowable for sites overseen by the CFTC. Eight lawmakers including Sen. Sheldon Whitehouse, Sen. Elizabeth Warren and Sen. Jamie Raskin said in a letter published to Sen. Jeff Merkley’s website:
“Election gambling fundamentally cheapens the sanctity of our democratic process,” concluded the letter. “Political bets change the motivations behind each vote, replacing political convictions with financial calculations. Allowing billionaires to wager extraordinary bets while simultaneously contributing to a specific candidate or party, and political insiders to bet on elections using non-public information, will further degrade public trust in the electoral process. We urge you to promptly finalize and implement this rule to prevent the commodification of U.S. elections.”
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