Regardless of the results, the 2020 United States presidential election will prove historic in a number of ways. The forecasting and betting market is no exception.
While legal wagers on the contest between President Donald Trump and former Vice President Joe Biden are not offered through U.S. sportsbooks, the action has caught fire at offshore spots and across the pond.
It is legal to bet on the contest in Europe, however, and more than $1 billion — double the amount from 2016 — is expected to change hands, Matthew Shaddick, head of political betting at British sports betting and gambling firm GVC, told Agence France-Press last week. Offshore book Betonline.ag said last week the election has surpassed the Super Bowl in terms of dollars bet and will be the biggest decision in the site’s history since the Floyd Mayweather-Conor McGregor boxing bout in 2017. William Hill international spokesman Rupert Adams said the firm had already seen more than £3 million wagered and expected that figure to eclipse £10 million (nearly $13 million) by Tuesday.
“We predict this will be the biggest wagering event of 2020,” Adams told AFP. “The figures are simply astounding and include all sporting events.”
Trump’s personality plays a large role in the interest behind the betting, Adams said, on top of the election season lasting more than a year when accounting for the Democratic primary.
The latest election forecasts, such as that of 538, give Biden a 9 in 10 chance of defeating Trump. But the betting markets do not see it the same.
“It is a much more Trump market,” Shaddick told AFP.
United Kingdom sportsbook Paddy Power has odds of Biden 2/5 (-250, implied probability 71.4%) and Trump 15/8 (+188, implied probability 34.8%). DraftKings operates a mobile sportsbook in Ireland and has similar odds (-210 for Biden, +160 for Trump). BetOnline also has Trump at +160 but Biden at a shorter -180, with money coming in on Trump over the last week. Adams, at William Hill, described a similar trend to AFP, despite national polls showing Biden with a commanding lead and positive numbers in key swing states.
“The bettors do not seem to care,” Shaddick said.
Thus, the action remains inconsistent; Paddy Power claims the last few weeks have marked more of a Biden tilt, while Trump accounts for the biggest number of bets (67%) and the most volume (80%), as he remains “the most unpredictable figure in political betting history.”
Why is betting on election illegal in U.S.?
As sports gambling is legislated on state-by-state level (it’s on the ballot Tuesday in a few states, such as Maryland), it’s usually approved by governments for wagering on athletic events. (Sometimes, states may give regulators the power to approve wagering on other things, such as the Oscars.) Presently, in no U.S. state where sports betting is legal and regulated are operators allowed to offer betting on politics/elections.
Operators in the U.S. are still offering skin in the game by installing free-to-play contests, since it isn’t technically “betting” or “wagering.” At FanDuel, the “Bet The Ballot” contest includes “Who will win the US presidency? (Joe Biden: -175; Donald Trump, +138)” in addition to which party will control the Senate and other possibilities, such as “Will Trump win at least one state Hillary Clinton won in 2016?”
Players in these contests appear to favor Trump over Biden. More than half of FanDuel participants heading into the weekend believed Trump would emerge victorious, while the majority of residents in 49 of 50 states participating in DraftKings’ contest picked Trump to win. (Colorado was the only state where a majority picked Biden to win.)
PredictIt, the political stock market
Wall Street will keep its watchful eye on the election and react accordingly. That, of course, is separate from the “stock market of politics,” PredictIt.org.
PredictIt is “a stock market for politics, where you can buy or sell shares in the expected outcomes of political events,” head of public engagement Will Jennings told USA TODAY Sports, that has seen 1.5 billion “shares” traded since its launch in November 2014.
PredictIt provides a market for hundreds of political outcomes — foreign policy, administration policy, international elections, Senate and House races (there are more than 200 markets to trade shares on regarding the 2020 election).
Here’s how it works: speculators can buy and sell shares between 1 cent and 99 cents for each candidate. On Monday, Biden traded between 63-65 cents, while Trump upped slightly from 41 to 42 cents. That means the market is setting a 63-65% probability he will win — much lower than the 538 forecast. If, for example, Biden were to win and someone had five shares of him bought at 64 cents apiece, those five shares would turn into $5.
Additionally, each state has a price attached. The more of a swing state it is, the closer to 50 cents it will trade at, with North Carolina, Georgia, Arizona and Pennsylvania all trading between 50-60 cents. People can wager on the results of a specific state and profit in that manner.
“If you buy a share in some outcome, you can sell it before the event is resolved,” Jennings said. “That’s kind of the stock market component of it. Some people are active traders. Some are buy and hold.”
On Election Day 2016, PredictIt gave Trump a 1 in 4 chance of winning over Democratic nominee Hillary Clinton. Those odds were better than what forecasts predicted, but closely mirrored the gambling market (4-1 consensus odds gave Trump a 20% chance of winning).
“Obviously, that’s not nothing, and I tend to think people forget a 1 in 4 chance is a lot more than giving him zero chance of winning,” Jennings said. “We get to the correct answer before a lot of other models.”
Jennings said the PredictIt markets started foreshadowing a Trump victory about an hour before the narrative on cable news election coverage shifted four years (and yes, there is a PredictIt market for when the election will be called, although state certifications of election results officially close a specific market).
“In some respects, (the markets) are more accurate than polling,” he said. “I think that they’re not a replacement to polling, but a complement and another way to look at an unknown event.”
Follow Chris Bumbaca on Twitter @BOOMbaca.