Americans are addicted to gambling on the election because it’s finally legal, sort of
People can’t get enough of betting on the 2024 presidential election, and thanks to a recent legal ruling, it’s easier than ever for Americans to vote with their wallet.
On Polymarket, one of the top online exchanges, people have already spent over $1.2 bn betting on the US presidential election. That includes two mystery individuals betting millions on a Trump win.
Betting market odds are suddenly on the lips of US broadcasters and campaign spin doctors, quoted like polls and watched like the weather.
Betting on elections has long been prohibited in the US, but various exchanges and their users have found ways to get in on the action nonetheless.
A federal appeals court ruled earlier on October 2 that prediction market Kalshi could offer contracts on US elections for the time being, leading to more than $3m in political contracts within the first week. Federal regulators at the Commodity Futures Trading Commission, which concluded last year such contracts run afoul of commodities law, argue this activity still amounts to illegal gaming or gambling, and are seeking further appeals hearings as soon as December.
With the legal status of betting inside of the US still up for debate, one popular way to put money down on the presidential race is to operate outside of America.
Eva, a software developer from the Netherlands, told The Independent she’s been betting since before the 2020 election. She first got into it during her time as a semi-professional poker player, and is drawn to political betting both for fun and because it’s “profitable.” People often bet based on their partisan politics, giving an edge to those who trade on probability alone.
She thinks Trump is “somewhat dangerous for democracy,” but she immediately put money down on the Republican after Biden was inaugurated, given the ”crazy” 15-to-1 odds being offered on a Trump comeback at the time. She appreciates political betting because of the way it clarifies your thinking, forcing you to deal in likelihoods and probabilities instead of thoughts and feelings.
“I think if more people put their money where their mouths were when it comes to politics, we’d probably be living in a more realistic and less partisan world,” she said via email, adding, “I feel like people could use some grounding.”
Another online better, a Bulgarian political analyst based in Germany, told The Independent he only got into the action a few weeks ago, putting 150 euro on Harris, as Trump has “too much of an extreme game” to win over enough voters. He thinks most people should probably stay away from betting though.
“I do not recommend political or any type of betting to anyone,” he said. “It is largely like casinos where the house has the edge and most if not all people end up losing on the long run. It is a very dangerous enterprise.”
“If you are good with risks and money and can be disciplined enough and do develop an edge, the potential returns might be worth it but that’s if you tick all of the above boxes which is almost never the case,” he added.
Among the most popular, and oft-referenced, platforms is Polymarket, founded in 2020. The site allows users outside the US to bet in crypto on the outcome of future events, including the presidential election, and features a video game-like leaderboard showing top traders and what’s in their wallet. Reporting suggests that despite it violating the site’s terms of service, plenty of Americans are using the site anyway via VPNs.
It may play like a game, but Polymarket is backed by some serious names, including like right-wing Silicon Valley venture capitalist Peter Thiel, whose firm was the lead investor on a recent $70m funding round, and elections guru Nate Silver, who serves as an adviser to the company.
Regardless of where it’s drawing its bets from, Polymarket has emerged as a kind of shorthand for the market outlook on the US election overall, frequently quoted on Elon Musk’s X feed and cable news discussions.
Musk tweeted earlier this month that Polymarket’s preference for Trump — currently around 62-38 for Trump — is more reliable than the traditional election research showing him behind Harris, since “actual money is on the line.”
On the other side of the spectrum are prediction markets like PredictIt, run out of New Zealand’s Victoria University, and the University of Iowa’s Iowa Electronic Markets, both of which avoid legal scrutiny by being run as academic projects rather than commercial ones.
Researchers say there are a variety of reasons why betting markets aren’t like polls — which is a good thing.
“It’s not who do you want to have win, but what do you think is going to happen. It’s a different question,” John Phillips, co-founder and CEO of PredictIt, told The Independent.
Not to be ignored, added Phillips, is that political betting markets are fun, not a word traditionally used to describe following the ups and downs of national politics. Moreover, betting may seem like a little game, but to do it well, you need to be basing your moves on solid information and quality news.
“That’s a good thing for democracy,” he said. “People who might be disengaged become engaged.”
Dr. Grant Ferguson, of the Texas Christian University political science department, told The Independent such markets pick up moment-to-moment changes in feeling and information that might not make it into polls until days later.
“They can react in real time,” he said. “If you wanna follow the odds for a particular candidate winning a state, you can watch how the market moves one way or the other during a debate. Sometimes that can have an effect. What that means is, the people who bet in these markets are able to incorporate a lot more information than just polling.”
Particularly interesting are moments where the markets and the polls diverge slightly, such as the one we find ourselves in now. Polymarket is bullish on Trump, while our poll tracker still finds Harris in the lead. According to Ferguson, the markets were also more bullish on Trump than the polling in 2016, an election which he won in a shock upset.
But this didn’t start with Trump — big money election betting has a long, semi-illicit, semi-legitimate history in the US, dating back to the days of Washington, sometimes eclipsing volume on financial markets themselves.
“Crowds formed in the financial district – on the Curb [Exchange] or in the lobby of the New York Stock Exchange — and brokers would call out bid and ask odds as if trading securities,” scholars Paul W. Rhode and Koleman S. Strumpf write in a paper on the subject. “In presidential races such as 1896, 1900, 1904, 1916, and 1924, the New York Times, Sun, and World provided nearly daily quotes from early October until Election Day.”
Despite their unique structure and engaged fanbase, political betting markets have plenty of caveats and detractors beyond just the Commodity Futures Trading Commission.
Last year, a group of Democratic senators including Elizabeth Warren warned in a letter to regulators that markets like Kalshi and Polymarket pose a “clear threat to our democracy.”
“For example, billionaires could expand their already outsized influence on politics by wagering extraordinary bets while simultaneously contributing to a specific candidate or party,” the letter reads.
And like the world of political “dark money,” election markets are basically anonymous, with big spenders visible only by a screenname, if that. The top trader on this month’s Polymarket leaderboard is a user named Fredi9999, who has made over $1.9m, largely in bets on Donald Trump.
Others worry about issues found on regular financial markets: insider trading, irrational runs, high-spending “whales” who shift the markets all on their own.
Moreover, there’s the prospect that the kind of person who uses a political betting market — highly online, with money to blow, possibly in crypto — might have baked in biases, just like any other sub-group. That could skew the predictive value of what their trades represent, but the Trump campaign seems to see this in-group as an upside.
It has been aggressively courting the online crypto-tech-finance bro nexus, with the Trump campaign hosting fundraisers in Silicon Valley, recruiting a venture capitalist as his running mate, and throwing his support behind a crypto “digital real estate” project called World Liberty Financial. Only a few weeks left to see if the bet pays off.