One person may not be great at predicting the course of political events, but the predictions of many people, made independently and collected, are highly reliable. That’s what more people are realizing about the value of political betting markets, which rely on the “wisdom of the crowd” to develop incredibly accurate and timely predictions about future political events. It’s been an increasingly valuable tool for political prognosticators going into the 2022 midterm elections.
It’s likely that the public and mainstream media will continue to put sizable weight on traditional polling for the foreseeable future of political campaigning, but the data gathered by political betting sites can no longer be ignored.
On the popular political prediction market site PredictIt, traders predicted the outcome of the 2018 US Congressional election more accurately than any pundit or professional forecaster, and in 2016, PredictIt traders signaled Donald Trump’s victory over Hillary Clinton over an hour before anyone on cable news or in the press declared him the winner. Overall, political bettors across several political betting sites were more accurate in predicting the 2020 final Electoral College outcome than major polling aggregators like FiveThirtyEight and The Economist. In fact, PredictIt data shows that at least 90 days before Election Day, traders had been accurately predicting the final outcome of the presidential election in many of the most heavily contested battleground states.
Leading into the 2020 election, polling underestimated Donald Trump’s performance (just like they had in 2016), but maybe even more surprising was how much they underestimated down-ballot races. Democrats held a 7.3-point lead in FiveThirtyEight’s final polling average of congressional polls, and Democrats were also favored to capture the presidency and win back the Senate. That’s not what happened. Democrats lost a lot of ground in the House, from a 32-seat advantage to just a 9-seat lead, and they’re barely holding onto control in the 50-50 Senate with a tiebreaking vote from Democratic Vice President Kamala Harris.
U.S. Bookies’ aggregated betting data also found that betting odds for the 2020 election were more accurate than in previous campaign seasons. This is because with more betting volume comes more predictive power of any given market, and the more people will be able to use the information as a source of legitimate data to cut through the noise of media and public opinion polling. During the 2020 election season, traders wagered more than $1 billion on political prediction markets. If this trend continues, political betting will be more useful than ever in the 2022 midterms.
For short-term events, political betting markets are far more valuable than opinion polls that can take several days to compile and release the data. Markets, on the other hand, react instantaneously to breaking news. For example, traders can react in real-time during an event like a debate. Markets are also able to digest large and complex data sets, such as election night results, much more quickly than those same results making their way to the public through the news media.
It’s no wonder why political prediction betting markets are gaining prevalence for their place alongside traditional public opinion polling as a timely and accurate source of information when considering public sentiment of political actors and events.
“There’s a last-minute trend that the polls obviously can’t capture,” said Robert Erikson, a political scientist at Columbia University who studies election polling. That’s where political prediction markets will continue to add value in the 2022 midterms and looking toward the 2024 presidential election.