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Money and Politics: Wagering on Elections and Other Political Events

Vote Pin on Top of a Pile of Money
Let’s face it.  Every election is a gamble. Our vote is the wager. We’re betting on the candidate that we support won’t only win, but make our city, county, state, or country better. We also are betting that the candidate will make our lives better.

But it just isn’t candidates, its bond measures, recall votes, city charter amendments, state constitution amendments, city ordinances, and much more.

But isn’t gambling on elections illegal in the United States?

Yes. Obviously, in states where gambling is illegal, you can’t bet. And in most cases, this would be a book bet (like a sportsbook). So you’ll have to place a bet with a foreign online site that will take US bets or visit another country. The other option, which is legal in the US is prediction markets, which I’ll get into in a bit.

The main place you’d expect to be able to place a bet of this type is in Las Vegas.

However, in response to Vegas oddsmakers taking action on the TV show Dallas’s “Who Shot JR” craze, the Nevada Gaming Control Board (NGCG) came out with codified rules on betting. In the document, they created several regulations, including Regulation 22.

Regulation 22 outlines prohibited wagers. Section 120 (c) gives the board’s ruling on betting on elections:

“22.120 Prohibited wagers; exception for an event other than a horse race, greyhound race, or an athletic sports event.1.No wagers may be accepted or paid by any book on:

(c)The outcome of any election for any public office both within and without the State of Nevada”

Thus, with the rule, Nevada has opted itself out of betting on elections. However, some other states and online sportsbooks do take these bets.

Historical Betting

Before the advent of political polling, betting on elections was not only commonplace but was the measuring stick by which elections were predicted.

As a matter of fact, betting actually increased participation in elections.

A century ago, radios were few and far between. The first radio newscast wouldn’t even happen until 1920. So the main way people found out election results quickly was to go to the center of the town or city you lived in. If the town lacked a central area, then they’d gather in the local saloon. Otherwise, you’d have to wait until the newspapers published the results the next day or week if your paper was a weekly periodical.

These gatherings were essentially results parties. People would celebrate their candidates win or loss. They’d bet while waiting on results, if they hadn’t done so already.

Many of these bets may have been a friendly bet, such as the winner gets carted around in a wheelbarrow or other such bets.

But you could get cash action on the election. Many upscale hotels and even some saloons would offer the opportunity to bet on the election outcomes.

Newspapers would print candidate odds on the front page.

In New York City, the financial district (Wall Street) would set up places for people to wager. They came complete with “official betting commissioners” that were selected to offer the odds and keep everything on the up and up.

Over the period from the election of 1884, where Democrat Grover Cleveland faced Republican James Blaine to 1940, where Democrat Franklin Roosevelt faced Republican Wendell Willkie, 14 of the 15 Presidential elections were predicted correctly by these financial district commissioners.

The betting action was so heavy in the election of 1916 between Woodrow Wilson and Charles Hughes that over $15 million was wagered. In 2019 money that would be worth over $300 million.

Betting on elections fell out of favor due to a number of factors. They include:

  • The radio becoming readily available to the average family
  • New York legalizing horse racing
  • Prohibition
  • Wall Street no longer wanting to be involved in election wagers
  • The advent of political polling, which supplanted wagering as the measuring stick for who was leading in an election

What do People Bet On?

In reality, people can place any type of bet that a bookmaker will take. The hardest part is finding someone to take the action.

Debates

Debates are a popular subject for betting. But betting on who wins and who loses a debate can be a bit tricky. News sources tend to lean towards sources that fit their narrative. So a left-leaning network and a right-leaning network may have different opinions on who wins a debate because of factors such as:

  • The political leanings of the correspondents
  • The opinions of the focus groups they select may slant towards a particular point of view
  • The audience that’s present at the debate

Despite these factors, betting on a debate can be fun. Bets can be as simple as who wind the debate, who goes over “time” the most, or who interrupts their opponents most.

It is even more fun during primaries where you may have 4 to 10 candidates on the stage in a “battle royale” to see who emerges as the frontrunner the next morning.

Popular debate bets include:

  • Will the candidates shake hands before the debate begins?
  • Will the debate garner more viewers than the last debate? (if more than 1 debate)
  • Which network will have the most recorded viewers?
  • What color will the candidates’ tie be?
  • What color will the candidates’ jacket be?
  • Who will be first to interrupt the other?
  • How many times will a candidate say one of their slogans?
  • How many times will a major story be mentioned? (same story)
  • First topic mentioned:
    • Fitness to be President
    • Immigration
    • Economy
    • Supreme Court
    • Foreign Hot Spots
    • Debt and/or Entitlements
  • Will a candidate choose to not attend a scheduled debate?

Campaigns

The President is sworn in on January 20th at noon Eastern Time following the election. On January 20th at 12:01pmt speculation starts on who’ll declare their intent to run in the next election.

We can take a look at how the 2020 election is shaping up on who’s declared their intent to run. The candidates who’ve officially filed to run, set up an exploratory committee, or who’ve declared their candidacy for President are:

  • President Donald Trump – Republican – Officially filed as a candidate for re-election on January 20, 2017
  • Governor William Weld – Republican – Officially filed as a candidate on February 15, 2017
  • Senator Cory Booker – Democrat – Officially filed as a candidate on February 1, 2019
  • Mayor Pete Buttigieg – Democrat – Officially filed as a candidate on January 23, 2019
  • Secretary Julian Castro – Democrat – Officially filed as a candidate on December 12, 2018
  • Representative John Delaney – Democrat – Officially filed as a candidate on July 28, 2017
  • Representative Tulsi Gabbard – Democrat – Officially filed as a candidate on January 11, 2019
  • Senator Kirsten Gillibrand – Democrat – Officially filed as a candidate on January 15, 2019
  • Senator Kamala Harris – Democrat – Officially filed as a candidate on January 21, 2019
  • Senator Amy Klobuchar – Democrat – Officially filed as a candidate on February 10, 2019
  • Senator Elizabeth Warren – Democrat – Officially filed as a candidate on February 9, 2019
  • Adam Kokesh – Libertarian – Officially filed as a candidate on July 18, 2013
  • John McAfee – Libertarian – Officially filed as a candidate on June 3, 2018
  • Sam Seder – Libertarian – Officially filed as a candidate on January 24, 2019
  • Vermin Supreme – Libertarian – Officially filed as a candidate on May 28, 2018
  • Arvin Vohra – Libertarian – Officially filed as a candidate on July 3, 2018
  • Dario Hunter – Green Party – Officially filed as a candidate on January 21, 2019
  • Ian Schlakman – Green Party – Officially filed as a candidate on December 3, 2018

Other people who’ve expressed interest in running who’ve not officially filed or declared are:

  • Senator Bob Corker – Republican
  • Governor Larry Hogan – Republican
  • Governor John Kasich – Republican
  • Vice President Joe Biden – Democrat
  • Senator Bernie Sanders – Democrat
  • Representative Beto O’Rourke – Democrat
  • Mayor Michael Bloomberg – Democrat
  • Attorney General Eric Holder – Democrat
  • Governor Terry McAuliffe – Democrat
  • State Representative Stacey Abrams – Democrat
  • Governor Jesse Ventura – Green Party
  • “Akon” Thiam – Independent
  • Mark Cuban – Independent
  • Howard Shultz – Independent

As you can see from the list that there’s a lot of fodder for bets. These include

  • Who’ll declare next?
  • Who’ll drop out first?
  • Who’ll win the party nomination?
  • Who’ll lose the party nomination and run as an independent?
  • Who’ll be the “spoiler” (if any) in the campaign?
  • Who’ll win New Hampshire?
  • Who’ll win Iowa?
  • Who’ll win (insert state)?
  • Will William Weld get a leg up on the competition due to the New Hampshire primary? (He’s from Massachusetts).
  • Will Elizabeth Warren get a leg up on the competition due to the New Hampshire primary? (She’s from Massachusetts).
  • How many stunts will perennial candidate Vermin Supreme pull that get national attention?
  • Who’ll be endorsed by President Barack Obama?
  • Who’ll be endorsed by President Bill Clinton?
  • Who’ll be endorsed by Secretary Hillary Clinton?
  • Will any Republican beat President Trump in a primary or caucus?
  • Who’ll get the Democratic nomination?
  • Who’ll get the Republican nomination?
  • Who’ll get the Libertarian nomination?
  • Who’ll get the Green Party nomination?

And that’s just a few. The campaign is always full of surprises and most that run realize that they won’t win, but are trying to put forth a message or trying to negotiate a better position for themselves in a future administration. For example, Joe Biden ran for President in 2008 against then Senator Obama. Once the writing was on the wall that it was down to Obama and Clinton as the last 2 Democratic nominees, Biden was offered the Vice Presidential candidacy and eventually Senator Clinton was offered Secretary of State.

Main Election and Electoral College

Once the candidates are chosen, the public goes to cast their votes for President in November. But that doesn’t decide the President. These votes may play a factor, but the main election occurs the following month when the Electoral College meets.

The Electoral College is 538 people who’re appointed by state legislatures to cast their votes for President. In most states, the elector is bound to vote for the candidate that won the state in the popular election, but in others, they can vote their conscience.

Even in the states where they’re required to vote for the popular vote winner, the elector can cast for anyone he or she wants. They may be sanctioned by their state afterward and even prosecuted criminally, but the vote will still count as there’s no federal law requiring this.

This allows for some really cool bets. Bets like who’ll win particular counties or states in the popular elections and who’ll win the electoral votes. Bets can also be placed on “faithless electors”, those who vote against the public’s will or don’t cast a vote. Other bets can include a situation like one that happened in 2016 where a candidate won the popular vote but lost the Electoral College vote as votes are apportioned by state.

Other Elections for Office

Along with the quadrennial Presidential elections, elections for all of the House of Representatives and 1/3rd of the Senate happens every 2 years.

That means that approximately 468 elections take place every 2 years. These elections allow for a massive amount of bets.

The television series The West Wing made light of the opportunities for betting in a few episodes, such as the episode Process Stories.

Some of the bets mentioned were:

  • Toby (the White House Communications Director): I bet against a Puerto Rican for Bronx Borough President. I deserve to lose.
  • Amy (Political Consultant): (to Toby) and you took a hit, ironically on a Wisconsin referendum to legalize gambling. But you did win four Omaha steaks on the over-under in the Texas Farm Commissioners race.
  • Amy: Jimmy Fitzsimmons won the Boston Mayor’s race by 51 points, and believe it or not, did not beat the spread.
  • Amy: Well, I picked a trifecta with the California 47th, the sheriffs’ race in Arizona and the Tulsa Family Court.
  • Amy: (to Josh, Assistant Communications Director) you owe me ten dollars on the Delaware 1st, ten dollars on Iowa 5th…. We pushed across the Mountain states and I lost Arkansas and the Georgia Legislature, but you went twenty on the Michigan gubernatorial… Right now, I’m only up ninety, but there’s a waste disposal bond issue in Jasper, Alabama that’s going to put me in a new pair of Manolos if it breaks my way.

The show, while fictionalized, has been said to be a fair representation of what happens in government. While these bets were apparently personal bets with other politicians, they represent the types of bets that action can be taken on.

In any given year, there can be dozens of state offices such as governor, lieutenant governor, state legislature, and other offices.

The county elections can include sheriff, constable, and commissioner to name a few.

Local offices such as mayor, city council, town council, selectmen, alderman, and many more positions are all open to voting and betting.

Plebiscites and Other Elections

In the list of bets that Amy from The West Wing mentions are a referendum regarding legalized gambling in Wisconsin and a bond issue in Jasper, Alabama.

These are legitimate types of issues that are voted on in general elections.

Along with bond issues and referendums, other types of elections include:

  • Constitution Amendments (state level)
  • Initiatives (A referendum in the US is the opinion of the public that may guide a legislature in making a law. An initiative is people actually voting on a new law…neither is a national option, only state, and local level)
  • Charter revisions (city or town level)
  • Recall elections (removing an elected official from office)

One such major plebiscite occurred June 23, 2016. It took place in the United Kingdom. The vote was whether the United Kingdom should remain part of the European Union. In a shocking outcome to many, the voters chose to part ways with the EU in what’s become known as Brexit, a portmanteau of “Britain” and “Exit”.

The outcome had many betting facets. As the UK consists of England, Wales, Scotland, Northern Ireland and several dependencies such as the Isle of Man and Gibraltar, people could place bets on regional or national results.  Those who bet on remain on a regional basis in most of these regions would have won as England and Wales were the main proponents of leaving, while Northern Ireland and Scotland voted to remain, but since it was a majority of popular vote, Brexit is in the process of happening.

Prediction Markets and Exchanges

Prediction markets are a way to bet that sidesteps gambling laws. These markets work similar to commodity trading markets and pay a certain amount for an outcome. The results are usually aggregate to predict outcomes of events.

If that seems a bit complicated, this of it as 2 competing GoFundMe accounts. If the one you “donate” to wins, you get the product that you donated money to help produce. If you “donate” to the one that loses, you get nothing. In this case, the prize is money. Usually a set amount as opposed to odds.

These markets have other names including:

  • Predictive markets
  • Information markets
  • Decision markets
  • Idea futures
  • Event derivatives
  • Virtual markets
  • Predictive exchanges
  • Decision exchanges
  • Information exchanges
  • Idea Exchanges

These markets have their roots in the financial markets that I mentioned in New York in the late 1800s and early 1900s. But in actuality, it goes back even further than that. The foundation for the ideas can be traced to the Papal Conclave of 1503 where Pope Pius III was elected to the Papacy.

The oldest prediction market for the purposes of elections in the US is Iowa Electronics Market which is run by the University of Iowa Tippie College of Business.

The IEM isn’t regulated, mostly because it is operated by a governmental unit. And you aren’t “betting” you’re “buying and selling contracts” based on such things as political results, economic indicators, and in some cases, deaths of politicians.

For Example

Let’s say you want to buy a share of the Democratic candidate. These shares top out at a value of $1. So if the Democrat wins and you buy that share, you get $1. But the cost of the shares fluctuate. So a long shot like Representative John Delaney may only sell for $0.12 a share. So if he wins, you win $0.88. You can buy up to $500 worth of shares on the exchange.

And you don’t need to wait until the election. As the elections progress, a candidate’s value may increase or decrease based on a number of factors. For example, let’s say that Representative Delaney wins the New Hampshire primary and his shares soar from the $0.12 that you bought it for to $0.67. You can sell the shares at any time and claim the $0.50 profit per share. You can even sell at a price you want to see if anyone will buy, thus raising the price of the shares

Other exchanges exist too. PredictIt is another exchange that people use. It works the same way as the IEM except that have an $850 limit and more options to choose from.

Prediction markets also have a scientific basis. They utilize a large amount of data in real time. These markets cut through the partisanship involved in a poll because a person will back up their opinion with cash. These markets get the information quickly and are nearly impossible to manipulate, so they actually are better predictors of the election outcomes.

Conclusion

While you can’t legally bet on elections in a US casino, there are other options.

Betting online with a foreign casino is an option, but they may be hard to find as many won’t accept US-based customers. The ones that do may require special ways to fund the bet such as Bitcoin as credit cards and PayPal won’t be accepted.

The exchanges provide a wonderful option for those who wish to bet and help predict a winner.

Of course, there’s always the option of placing a bet with a friend, where no one can interfere.