A Case For Political Betting In The US
Political polling for the US election has recently been largely inaccurate as particularly seen in the 2016 Presidential and 2022 Midterm elections (the senate specifically). One popular explanation for the decline in accuracy is polling bias —the demographics of the people who do and don’t answer polling questions. Nonresponse bias for the 2016 election meant less-educated rural voters were under-accounted for and the 2022 election Generation Z voters. These populations were underrepresented in polling compared to the actual election results. How can we get a more accurate reading on the pulse and leaning of the US electorate? How can we reach populations that have been increasingly difficult to poll? The solution could be political betting.
Political gambling has been banned on the federal level in the US, despite being popular overseas. In the US, election wagering takes the form of the stock market more than sports betting, where people buy and sell candidates’ shares. US election wagering has become increasingly popular. PredictIt, a popular online prediction market had 22,00 traders before the 2016 US presidential election. Now it has more than 177,000 and everyone is getting in on the action, from professional stock traders to everyday voters.
These prediction market and betting sites have a few key benefits compared to polling data. As stated previously, polls usually miss large swaths of people. Markets, however, are used by many people and thus often capture a larger demographic of people. This also has benefits beyond the scope of polling. By placing a monetary value on their bets, users have a better chance of making money if they are more informed. As reported by the New Yorkers, betters become “better-informed citizens” as a result of these markets.
Another benefit is the real-time response to current events. Sure, a poll can be conducted after a major economic crash or natural disaster, but this data takes time to gather, compile, and upload. Prediction markets, conversely, are updated instantaneously. This makes these markets more volatile and arguably more accurate about real-time feel.
It is important to note the downside of these markets. The democratization of these markets allows users to make any type of bet, including artificially inflated results. This includes betting on unlikely candidates such as Dwayne “The Rock” Johnson and Kanye West for the 2024 presidential election. We have previously seen how large meme and Reddit communities can have large effects on economic markets like the GameStop Stock disaster. If political information starts more heavily relying on political betting markets that are artificially manipulated, there will not only be economic downstream effects but also effects on political forecasting and possibly election results.
Citations
- Betting on elections can tell us a lot: why is it mostly illegal, Danny Funt (2022) https://www.newyorker.com/news/the-political-scene/betting-on-elections-can-tell-us-a-lot-why-is-it-mostly-illegal
- Political betting is surging: the forecast is about to get complicated, Rick Marse (2022) https://www.washingtonpost.com/sports/2022/11/02/political-betting/
- Why 2016 election polls missed their mark, Andrew Mercer, Claudia Deane, Kyley McGeeney (2016) https://www.pewresearch.org/fact-tank/2016/11/09/why-2016-election-polls-missed-their-mark/