Polls apart: Why a lack of political betting is a huge missed opportunity

In a little under seven months from now, on November 3, Americans will head to the polls to decide their next president, providing coronavirus doesn’t derail the election timeline. With the global pandemic wiping out most sport around the world, forcing sports-starved bettors to make do with Nicaraguan soccer and Ukrainian table tennis, the 2020 election could very well turn out to be the biggest global betting event of the year. Americans, however, almost certainly won’t get the chance to legally wager on the outcome as those states with legalized sports betting have pretty much limited it to just that, sports betting.

Those wishing to bet on politics have the option of the offshore sites that freely offer it, or they can chance their arm on sites like PredictIt, a real-money prediction market based out of New Zealand described as a “stock market for politics.” New Jersey and Indiana have gone as far as allowing betting on the Oscars, yet regulated political betting remains off limits in both states, and elsewhere for that matter. In 2013, the Nevada Legislature was presented with a proposal to green-light wagering on elections, although it eventually came to nothing.

On April 7, however, US gambling Twitter came alive when news surfaced that FanDuel’s online sportsbook in West Virginia was suddenly offering betting on the election. Sure enough, the app featured odds on the winning candidate, the Democratic nomination, the Democratic vice president and winning party. It turned out to be short-lived, though, as FanDuel soon performed a volte-face and pulled the markets about an hour later as there seemed confusion over whether the regulator, the West Virginia Lottery, had given its full seal of approval. Moreover, was this even legal?

A strongly worded statement issued the following day by West Virginia’s Secretary of State, Mac Warner, was unequivocal in its disapproval and underscored that betting on politics has been illegal in the state since 1868. “Gambling on the outcome of an election has no place in our American democracy. Not today. Not tomorrow. Not ever. This is a terrible idea.” So, it certainly appears FanDuel or any other operator won’t be booking bets on the election anytime soon in the Mountain State. Proponents of legalized political betting will argue Warner’s obdurate stance is short-sighted and draconian, particularly when an appetite for betting on politics exists.

“Political betting could be imaginably big [in the US]; I think it’s just got exponential growth” says Paul Krishnamurty, a well-known political analyst and professional gambler behind the Political Gambler blog in the UK. “When I was in Vegas in 2016, I spent some time with [veteran bookie] Jimmy Vaccaro at the South Point casino and he couldn’t take the bets, but he would advertise the odds on all sorts of candidates. Everyone was talking about it and saying, ‘I really want to get 5/1 Donald Trump.’ So, I think it would be absolutely huge. And possibly bigger in America than it is in Britain because the presidential election is personality-based. It’s like a boxing match.”

The Trump factor

In the red corner you have the divisive incumbent, Donald Trump, who is around an even-money chance with European bookmakers to serve a second term in office. In the blue corner, the Democrat nominee seems set to be Joe Biden (currently around +120 to be the next president) in what is shaping up to be a closely fought battle to the White House.

Trump naturally adds extra interest and spice to the contest. To his critics, the 45th president is a volatile, capricious, thin-skinned narcissist. In his supporters’ eyes, he’s a no-nonsense businessman sticking it to the career politicians and delivering on his pledge to “make America great again.”

Due largely to Trump’s unlikely participation in the 2016 presidential election, it was the most popular political betting event ever for bookmakers in the UK. William Hill, for example, attracted more than £4m of the estimated £20m industry-wide handle, while Paddy Power laid a greater volume of bets on the outcome than the Irish firm took on any of golf’s majors that year. Paddy Power, arguably the pioneer of so-called novelty betting, has a heap of Trump-related betting markets on its site. And this was before the pandemic took hold. For example, it’s odds of +200 that Trump opens Area 51 to the public, +1,200 that Mexico pays for that wall, and +500 for him to confirm he’s undergone some form of hair surgery.

Meanwhile, you can back Trump to ban gay marriage at +600 or bet that France will ask for the Statue of Liberty back. That’s odds of +10,000. These wacky markets are more about drumming up PR and driving bettors and the curious to the site and app than they are about taking a profit. Indeed, Paddy Power’s appointment of a ‘head of Trump betting’ in 2017 was principally about generating headlines. Elections in markets like the UK provide an opportunity for bookmakers’ PR machines to switch into overdrive.

A case in point is William Kedjanyi, political betting analyst for UK racetrack and online bookmaker Star Sports, who fronts the operator’s political betting output and will position himself outside the UK’s Houses of Parliament with a board displaying the latest election odds. On the US specifically, Kedjanyi says: “Sports betting has exploded in the states that have legalized it and I have no doubt that political betting would go the same way. I would also point to the horserace-nature of politics in the US and how the US is the most well-polled nation in the Western world without exception, while many of the political conversations there focus solely on who will win the nearest election to the time.”

Kedjanyi adds: “Elections generally give you a wide range of options and individual markets. You can bet on Senate races, you have the primaries, and you have the big event itself. The US never really stops in terms of its election cycle because two years after an election you have the mid-terms.”

Casting the net wider

Political betting also helps operators tap into a different breed of gambler or complete betting virgins who may not be interested in sports betting. After all, politics affects everyone in society, although just 58% of eligible voters in the US, or some 130 million Americans, actually went to the polls four years ago. Krishnamurty says: “I know a lot of people who I met at university who’d never had a bet on sport in their life but would definitely have a bet on the [UK] General Election or a next party leader.”

The main political betting markets, especially US elections, also attract heavy action in the UK. For example, one London gambler bet £200,000 on Donald Trump at +250 with the sportsbook arm of spread betting company Spreadex ahead of the 2016 election.

Meanwhile, William Hill took its biggest ever political bet, €550,000, on Hillary Clinton when she looked nailed on to win. Last month, Star Sports booked a £50,000 wager at odds of -1,000 on Biden to win the Democrat nominee. The following day, Biden was bet to the tune of £99,000 at odds -3,300 (to win a modest £3,300). Star Sports also took four-figure bets on Hillary Clinton and Michael Bloomberg, both at long odds. “We are seeing the big gamblers play in this arena,” Kedjanyi explains. “You will get people who will bet hard in politics, based on not only their own intuition but also their own data.”

The 2016 US election and the EU Referendum were huge betting markets in the UK as handle on both events outstripped most sporting events that year, yet you could point to the emergence of peer-to-peer exchanges as the spark that lit political betting’s fuse. A total of £200.5m was matched on Betfair’s ‘next president’ market in 2016, making it the largest event in terms of matched volume in the exchange’s history. At the time of writing, there has already been over £24m ($29m) matched on the same market for the upcoming US election. The efficient and predictive nature of peer-to-peer betting on politics was one of the drivers behind American Jason Trost’s desire to launch Smarkets over a decade ago.

Today, global politics is very much front and center at Smarkets, supported by distinctive graphs displaying the implied probabilities over time for various outcomes. Besides the main election markets, Smarkets has a host of Trump-related betting options, such as his approval rating, his year of departure, and even how many tweets he will fire off in April 2020 (the favorite is between 881 and 970 tweets). Interestingly, the 2020 election has more than a 7% chance of not taking place this year, according to Smarkets. “The US election has been far and away our biggest area of interest among customers. We’ve had huge amounts of betting on it,” says Sarbjit Bakhshi, head of political markets at the London-based exchange.

“With sports drying up, more people are looking around at what they can bet on and we have the most comprehensive range of political betting on any UK site, perhaps in the world, mainly because we take it so seriously.” On the whole, betting exchanges are a fairly accurate gauge of public sentiment and an indication of how elections are going to pan out. It’s very much the wisdom of the crowd, even if Trump – a big underdog last time – did spectacularly upset the odds. “That idea of probabilistic thinking and prediction markets is gaining currency,” says Bakhshi. “You have people connected to governments who are really interested in prediction markets and what they can do.”

While the UK has embraced political betting, the US doesn’t seem ready or able to take the plunge, particularly if FanDuel’s start-stop launch in West Virginia is anything to go by. That curious debacle will probably also draw some unwanted attention at a federal level. Furthermore, anything beyond betting on professional sport is ripe for corruption in the eyes of some, even if a ‘next president’ market would be virtually impossible to manipulate for betting purposes. Until lawmakers have a change of heart, offshore sites will continue to take political bets from Americans and thumb their noses at regulators, while licensed operators are still left with precious little to offer their customers for much of 2020.