Political polls dominate pre-election coverage, however, the betting markets could soon take over.
Many commentators argue that betting markets, often offered by exchanges, provide a “more pure” prediction than polls as “real people are putting down real money”.
Speaking on The Journal, a collaboration between the Wall Street Journal and Spotify, Wall Street Journalist Alexander Osipovich said: “There’s this argument, which I find very interesting, that prediction markets create a public good. Many of us spend a lot of our time checking opinion polls to see whether our preferred candidate is up or down in the polls. And prediction markets offer another way to kind of get at that.
“There’s a lot of debate over whether betting markets on elections are a good thing or a bad thing. They do give you sort of an independent source of forecasts outside of pundits and opinion polls. As we’ve seen in the past few election cycles, opinion polls can be wrong.
“Advocates of prediction markets say they’re kind of more pure in a sense because these are real people putting down real money. When you do that, you tend to assess the situation. You don’t want to lose money so you place a bet that you have strong conviction in.”
This point was also argued in June by Eric Zitzewitz, Professor of Economics at Dartmouth, while appearing on Slate’s Hear Me Out with Celeste Headlee.
He suggested that market prices are more representative of the public’s opinion than polls, which he says are often impacted by random errors and systematic bias.
“I think that the fact that a market price comes out of a market that anybody can participate in, that reflects a weighing of many people’s opinions,” he explained.
“I see that as much less manipulative than if voters listen to one particular person with one particular agenda.”
Looking at the current race for the White House, many polls have shown the election to be a dead heat or slightly in favour of Kamala Harris. However, it is a different picture on betting exchanges, with money coming in on a Donald Trump victory.
Although the result of the election is yet to be known, at the time of writing Trump is currently shown to have a 61.73% chance of returning to the White House for a second term according to Betfair’s odds.
Given that 22 out of the last 24 elections have been won by the favourite in the Betfair odds, this points to the predictive markets being a reliable indicator of the outcome.
Heavy betting on the election
The US election has been dubbed by some as ‘the biggest event in the history of gambling’. Betfair reported that almost £150m has been bet so far on its exchange, with the operator expecting the figure to increase greatly as election night unfolds.
🇺🇸 Almost £150m has been bet so far.
— Betfair Exchange (@BetfairExchange) November 3, 2024
🔴 £89m has been matched on Trump
📈 Matched at a a high of 21
📉 Matched at a low of 1.41
🔵 £42m has been matched on Harris
📈 Matched at a a high of 150
📉 Matched at a low of 1.82
Osipovich suggested that operators have benefited from the constant headlines created by both candidates throughout their campaigns.
He said: “We are in an unusual election. Every four years people say this is the most important election ever, but this is really an interesting election.
“Trump and Harris represent very different directions for the country and it’s been unusual in terms of the sum of the events that have happened. Joe Biden dropping out and the drama around the Trump assassination attempts. This has been an unusually volatile election season.”
This sentiment was shared by Joe Lee, Head of Strategy & Performance at AK Bets. Speaking to Business Journalist for GamblingTV, Christian Lee, he described the antics of Donald Trump as transforming the election into a “mass market event” and “intertwining reality TV and real-world politics”.
