The rise of political betting in 2020 and beyond

Political betting and prediction markets have gained traction and popularity for what researchers say is their more accurate way of gauging the outcome of political events. By using prediction markets that incentivize people to gather information and “put their money where their mouth is” so to speak, the public can gather more real-time sentiments about political events than traditional polling can.

The No 1 political betting market in the U.S., PredictIt, reported market accuracy of 70 to 80 percent and record-breaking trading levels leading into the 2020 election.

Ever since the 2016 presidential election where traditional polls had Hillary Clinton beating Donald Trump throughout the campaign, until Trump ultimately won the Electoral College vote, political betting markets have seen increased notoriety among the general public for their accuracy. Again in 2020, traditional pollsters overestimated President Joe Biden’s winning margins and results of down-ballot races, but leading up to Election Day, PredictIt traders accurately and consistently predicted the final outcome in several battleground states.

Across the board, betting markets saw record amounts of traffic leading up to the 2020 race and unprecedented interest in betting odds and trading.

While still highly regulated in the U.S., betting industry experts see a huge potential for growth for U.S.-based bookmakers should the industry move in the direction of Europe where political betting is completely legal. The London-based betting market, Smarkets, has taken more than $11 million in wagers on the U.S. presidential election, and has used the data it gathers to make predictions on other political events. Overall, it’s reported that betting markets around the world traded more than $2 billion on the 2020 U.S. presidential election.

Another trend leading the interest in political betting markets is the plummeting public trust in mainstream media sources. Instead, this skepticism creates an “emerging tendency to ‘trust the crowd’ rather than relying on polling and other traditional means of gauging public opinion,” according to Fortune.

Experts think that political betting and the wisdom of the market will be a much bigger part of the conversation about political outcomes going forward. It is not exactly an apples-to-apples comparison, rather a completely different way of looking at information gathered from the public that in many instances has been more accurate in predicting events in an increasingly complicated political environment. Traditional polls tell us if one candidate or issue has more or less support among an increasingly selective group of people who respond to polling inquiries, while political prediction markets reflect the likelihood of a result occurring. This is an “arguably more nuanced, open-ended perspective,” according to Fortune.

Looking ahead to the next major election cycles – the 2022 midterms and 2024 presidential election – people are eager to get their predictions in early and possibly make some money on following these events over several months or years. Retirement announcements and statements from former President Trump that he will support primary challenges against certain members of Congress are just some of the ways that current events are creating an increasing number of markets for people to bet on as the country, and political betting markets, gear up for the next four years and beyond.