One of the areas in life that I personally find very interesting is politics. Yes, wayyyyy too many things have become political, but what I am referring to is US politics and how we can use the information we know about the ongoing relations between the parties and the US body politic to make money!
I do not personally bet large stakes on politics and leverage some interesting markets (see below) to get my action so these are generally not worthy of full substack posts (I talk about it mostly on the Gamblers Paradise Discord), but given that we are about 2.5 weeks from the mid-term elections I thought I would do a quick primer on it!
How does political betting work?
Well, it works very similarly to sports betting! There are generally two types of political betting that I will cover Futures and Matchups.
The best way to think about this is based on how far out you are from an election and how many candidates are there still in the field. For example, a Futures market would be “who will win the 2024 US Presidential election” which has upwards of 20 names in the market that you could select from.
Match-up markets are the markets once we have the list of the two or 3 main contenders for a specific election - think of the Pennsylvania Senate campaign between Dr. Oz and Jon Fetterman or which party will be in control of the Senate after the 2022 elections.
Similar to sports betting these markets will have odds (e.g., +5000, +1000, -120) and you can bet on them accordingly!
Where can I bet on politics?
Many off-shore websites, and I have heard some on-shore ones, offer markets on a host of election bets and I definitely leverage that for some of my action, especially futures tickets. This action is, as I explained above, very similar to wagering on sports.
That said, the primary place I place action is on a website called PredictIt.org1. This is a site (that claims to be fully legal in all 50 states) that allows you to make predictions on all sorts of political markets.
The way PredictIt work is somewhat similar to how options contracts work in financial markets. All contracts are priced between $0 and $1 and if you buy a contract and you are correct the contract pays $1 and if you are wrong you get $0. For example, if in the run-up to the 2020 US Presidential elections you bought a contract for Joe Biden at $0.50 they would each be worth $1 after he won.
Should I just bet what the polls say?
Short answer: ABSOLUTELY NOT!
Longer answer: If polls were 100% predictive gambling on politics would be pretty boring….as we have all seen the last 6 years in the US and internationally, polls can be VERY wrong. If you remember back to 2016, the Brexit polls said it was a virtual certainty that the Brexit referendum would fail but the betting markets told a starkly different story - that it was far closer to a 50-50 story. The 2016 Election of Doland Trump was another time the betting markets showed a far more accurate picture.
Further to this point, FiveThirtyEight gives ratings to polls regarding how much we should be trusting them, and even accounting for this you still have polling bias and unique things like the “shy Trump voter” phenomenon.
If polls are wrong and betting markets are right, how do I bet?
I never said polls are “wrong”. I just gave an example of where they were. If you follow polls, you will see new polls come out that have a clear effect on the gambling markets.
So what do you do instead? First and foremost, you have to find sources and understand the bias in each source. If you are going to listen to Pod Save America or watch MSNBC you have to understand it is going to come with a healthy dose of left-wing spin. If you read the Daily Wire or watch OAN you have to understand it is going to come with a healthy dose of right-wing spin.
I will cover how I have personally used my mind and the information available to me to bet below, but I will tell you that the trick to this is taking all the information you have and coming up with a story as to how I think things will play out and betting that story accordingly.
How do I personally bet?
As always with gambling, the name of the game is finding value. While I really enjoy politics, I actually do not have an official political party affiliation and I try to keep all my personal political biases out of my betting.
Many people find it very surprising when they hear that I do not have a political party and when they ask about my political beliefs I always quote Chris Rock, “there are things I am conservative about and there are things I am liberal about”.
Now, even if you have a political preference you can still be profitable - similar to how you can be profitable betting on the NFL if you are a diehard fan of a specific franchise, it is all about understanding your biases and adjusting accordingly!
Two examples of how I bet:
Way back in January 2021 after (Jan 6), I wagered on the following tickets to win the 2024 Presidential Election (current odds in parentheses):
$20 on Nikki Haley +1200 (+3500)
$15 on Andrew Coumo +3000 (+30000)
$20 on Ron DeSantis +5000 (+275)
My thesis at the time was that Joe Biden was unlikely to run again in 4 years and/or the Democrats would take what I think was the wrong message from the 2020 elections2 and become incredibly unpopular. Further, my thesis was that in response, post-Jan 6 we would not have former President Trump running and the Republicans would look to more palatable candidates while the Democrats would turn to their own NY brash politician who was seen as doing a great job on COVID.
Here we are, almost 2 years later, and you can judge for yourself how good or bad those predictions have been (I would say it is a bit of both), but I just give you this example so you can see how I think about things.
Another one I have been talking about recently on Discord is the aforementioned Pennsylvania Senate campaign. At the time, former Lt. Gov. Fetterman was leading in the polls, but it had become very clear that he was unfortunately3 very affected by his stroke. As a result of his stroke, he was unable to campaign and his ability to speak coherently had been badly comprise. While his campaign was trying to obfuscate how badly he was affected, right-wing media would make sure it became a campaign issue. As such, I took a position in favor of Dr. Oz through the PredictIt markets.
What do I think will happen this year?
Mid-term elections are always interesting and, as has been said ad nauseam, they tend to move towards the party that is not currently in control. On top of that, I think we are running into two competing trends and I think it will be super interesting to see how it plays out:
The current President and his policies are deeply unpopular in much of the country (see today’s NYT article about how no one wants him to campaign with them). Further, while he continually states the economy is strong, the reality is inflation remains the biggest issue for voters and some of his other policies and statements are turning off the folks who really got him elected, suburban white voters4.
The Republicans have picked some VERY unsavory/risky candidates to run in statewide elections. Yes, the DNC helped fund many of these campaigns as they (rightly) assumed these candidates would perform worse than normal stock and trade conservatives, especially with those same suburban white voters, and these candidates can’t seem to not say stupid things (see: Hershel Walker).
My personal thesis (and how I am laying my action) is that the Democratic voting numbers will be a bit underwhelming and the Republicans will come out to vote. Given that, unless there is a specific candidate who I think is especially good or bad, I am looking toward races where the Republican candidates are being undervalued (similar to my example above with Dr. Oz) and picking my spots in races like the Senate campaign in Arizona (I like Mark Kelly in this one) where I think that the respective quality of the candidates will make up for the right-leaning bias of the electorate.
I hope this helps. For all those who are interested please come join our discussion:
Hope to see you there!
If you are a US citizen who is eligible to vote, I implore you to please make sure you are educated on the candidates running in your area and take part in the political process on November 8th, 2022.
One thing to be careful of with PredictIt is that they are currently in a standoff with the CFTC and it appears some sort of resolution will be happening in mid-Feb 2023 so I would be careful with how much you put on the platform and I would be VERY careful with any markets that go longer than that date.
The message I thought they would take from the election would be that they should push an ever more progressive agenda rather than moderate and realize their gains were more focused on “not being Donald Trump”
I say unfortunately on a purely human level and not a political one. I am not a resident of PA so my personal views on that race do not matter as I do not have to cast a ballot in that race. That said, it is hard not to feel bad for someone who had such a significant health event.
If you look at the election result differences between 2016 and 2020 it is very apparent that suburban white voters, especially moms, were the voting block in which President Biden most fulsomely outperformed Hillary Clinton. Yes, I know the narrative is that black voters got Biden to the White House and it is absolutely true because without them he does not win the Democratic Primary, but when you look at the 2020 Presidential election and compare it to the 2016 Trump actually outperformed with Black voters.