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Betting On The Primaries Takes Out The Sting


I sit in a brightly appointed coffee shop on a Saturday afternoon, eyes glued to early returns from the Maine GOP primary. Sen. Ted Cruz is performing strongly in a state that was expected to favor Donald Trump, and the political betting markets are responding accordingly. A better-than-expected result in Maine could portend favorable returns for Cruz in Louisiana and Kentucky, two states that vote later that day and also expected to lean Trump. Shares of Cruz to win all three states have jumped, and traders are excitedly speculating about the possibility of an anti-Trump wave.

Cruz ends up winning Maine and placing a close second in Kentucky and Louisiana. If you were savvy enough to buy low on Cruz in all three states and unload his Kentucky and Louisiana shares at just the right moment, you had a very good night indeed. I should add, in the interest of full disclosure, that I was not that clever.

This has been an excruciating primary season for conservatives, but low-stakes political gambling offers a respite from the madness of Trump’s endless march to the nomination. It’s an arena that encourages participants to restrict their political engagement to a coolly detached assessment of the candidates’ strengths and weaknesses, while limiting the psychological impact of successive campaign controversies to the realm of modest wagers.

The World of Low-Stakes Political Gambling

I obsessively follow (and place the occasional bet on) PredictIt, a relatively low-stakes predictions market hosted by Victoria University in Wellington, New Zealand. This is not the world of offshore betting sites or high-stakes political gambling (for that, Politico has you covered). The university obtained a low-stakes exemption from the Commodity Futures Trading Commission to test the viability of predictions markets in politics and foreign affairs. You can wager smallish sums on everything from the North Korean nuclear program to the next mayor of London, but in the middle of primary season, most of the open markets are related to American politics.

Primary gambling is a strange hybrid of stock picking and sports betting.

Primary gambling is a strange hybrid of stock picking and sports betting. As with sports, a finite outcome determines winners and losers, gains and losses. But during the period between the opening of a betting market and the actual event, shares fluctuate based on the latest polls, news reports, and an undercurrent of rumor and speculation disseminated by a Twitter subculture of political diehards. You can ignore the ebbs and flows and bet your assumptions about a candidate’s viability or a primary’s eventual outcome, or you can try to anticipate the markets’ shifts and trade accordingly.

Like sports betting, primary markets attract both sharps and fans. The fanboys and ideologues are readily apparent in the various markets’ comment sections—Bern-outs, the CruzCrew, Trumpkins, and Hillboyz all tout their candidates’ strengths with a single-minded ferocity that recalls the worst excesses of sports fandom. Meanwhile, neutral commenters offer dispassionate-sounding analysis that is only occasionally marred by bad spelling. Why anyone feels compelled to broadcast his savvy gambling strategies is still a bit of a mystery. Do these steely-eyed bettors think Gordon Gekko sent his rivals advance notice on the eve of a hostile takeover?

Why Do We Do This?

Fortunately, the stakes on PredictIt are modest compared to Gekko’s fictional empire. Most buy and sell offers involve tens or hundreds of shares, and the site limits individual users’ buys in a single market to $850. PredictIt’s betting markets are charmingly ramshackle compared to what goes on in Las Vegas or on Wall Street.

PredictIt’s betting markets are charmingly ramshackle compared to what goes on in Las Vegas or on Wall Street.

With so little at stake, it’s reasonable to ask why anyone would stay up until four in the morning on the East Coast, desperately refreshing the CNN results page for a Hawaii caucus that will almost certainly have no bearing on the outcome of the Democratic race (not that I did that, mind you. I was in bed by 3:30). A professional gambler might have a serious financial stake in the hours spent scanning poll results and state-by-state demographic breakdowns, but we amateurs have no such excuse.

PredictIt’s active and grammatically challenged comments section offers one explanation. Behind every wager is the need to obtain tangible validation from events that inspire passionate disagreement. Every dollar earned is an affirmation of your farsightedness, a much more rewarding outcome than another round of “I told you so” (although PredictIt’s comments feature plenty of those, too).

Endless arguments with anonymous fellow bettors—and the modest wagers that fuel those arguments—are a convenient outlet for a certain kind of person’s not-so-sublimated competitive instincts. Before embarking on a seemingly ill-advised trip to Las Vegas and the 2000 World Series of Poker, journalist James McManus summed up the appeal of cards (and any other form of gambling, for that matter) to a particular species of American male: “Middle age, shin splints, a torn meniscus, and a much more deliberate temperament have reduced me to a spectator – to ‘hiker biker guy’ . . . Yet Bad Jim still needs to keep score. To keep scoring. The thrill of victory and the agony of defeat and all that. Who’s the man?”

While there is no reliable information about the type of person who scours Twitter for the latest polling data or bets on which Republican also-ran will come in second in New Hampshire, if I had to guess—or gamble—I’d say PredictIt’s users are overwhelmingly male.

Every dollar earned is an affirmation of your farsightedness, a much more rewarding outcome than another round of ‘I told you so.’

For those grasping for a highbrow justification, gambling also offers a weird but nevertheless compelling window into the states voting in this year’s unusually competitive primary season. Ever wondered about Hawaii’s political culture, even if you’ve never made it further west than the Rocky Mountains? The state’s liberal reputation and Dennis Kucinich’s astonishingly strong showing in the 2004 Democratic primary hinted that it would be favorable territory for Bernie Sanders, and sure enough, he prevailed by a decisive margin.

Meanwhile, it became clear that Cruz would narrowly beat out John Kasich for second place in Michigan even as the returns were virtually deadlocked because the affluent, Kasich-favoring suburbs had already reported their totals, while votes from several counties in the conservative, Cruz-leaning upper peninsula had yet to be counted.

A Sense of the Political Landscape

Primary gambling actually gives you a fairly sophisticated understanding of each candidate’s electoral coalition, as well as the political and demographic characteristics of the states they compete over. Trump strongly appeals to less-educated, less-affluent voters who are weakly attached to the Republican Party. Caucuses, which usually exclude registered Democrats and Independents and are more time-consuming than traditional primaries, favor Cruz and his coalition of committed conservatives and evangelicals. Regional quirks also play a role in primary outcomes: Trump’s outsized ego and brash public persona are real liabilities with Mormon voters and Republicans in the Upper Midwest.

Placing a wager based on a National Enquirer cover story or the latest cable TV firestorm is a good way to lose money quickly.

Similarly broad strokes render the competing Democratic coalitions. Sanders performs better in whiter states and among young voters. Hillary Clinton, meanwhile, is heavily dependent on minority support and older, more affluent Democrats. These generalities provide the outline of a betting strategy, but they also offer an interesting look at the type of voters each candidate attracts. The markets also teach you to separate the wheat from the chaff of election-year coverage: placing a wager based on a National Enquirer cover story or the latest cable TV firestorm is a good way to lose money quickly.

The benefits of drowning out the interminable cable news cycle brings us full circle. Amateur political gambling has become a psychological coping mechanism, a way to distance myself from the fact that the GOP frontrunner is an orange-tinged, gaffe-prone reality TV star, and that whatever happens, the slow-burning toxicity of this endless primary season will almost certainly cost the party the White House in 2016. Making a few extra bucks on Cruz’s prospects in Indiana may be cold comfort in The Year of Trump, but at least it’s something.