For the uninitiated, my background is largely in sports data. After no longer being employed in that field, it became legal for me to wager. I have done quite well. And again this year.
This post is not about that. It's simply to say I am acutely aware of the competitiveness and efficiency of betting markets - anyone who says they're making money long term should be viewed extremely skeptically and once they ask you for money to have access to their super duper locks, you should unfollow and run away.
And also to brag.
(I post all of my picks for free on Xwitter solely for the timestamp, because, again, if someone says they're winning long term, you shouldn't believe them).
Whether or not anyone “believes” me is not a concern that keeps me up at night.
Over the years, it has come to my attention that I'm pretty good with numbers - hence the interest in high data events. Both sports and more recently political data & polls.
All that being said
Political betting markets are highly inefficient
There are, effectively, two types of betting markets:
Peer-to-peer exchanges or prediction markets in which the company/owner assumes zero risk, and wagers are paid (minus a fee/commission) based on which side won.
Traditional sportsbooks in which the company/owner assumes all the risk, in the sense that if everyone bets one side of a wager, there is no guarantee they make money.
Exchanges typically have arbitrarily low limits, and it makes sense that those markets could sometimes be irrational. It's just whatever people want to bet.
But this post is mainly about the traditional sportsbooks.
Contrary to popular belief, traditional sportsbooks have no real interest in the “50/50” action that would guarantee them a profit.
They are happy to take some risk on any side that they think has an edge. They call it “exposure.”
They are okay with “good exposure” and want to avoid “bad exposure.”
But political markets are different.
In 2020, after Biden had been declared the winner (by a comfortable margin, remember) sportsbooks made an unprecedented move.
They were waiting to pay out winners until after the Electoral College votes were cast.
The reason was, Trump planned to appeal, which is fine…then he tried to get states to delay results…and send fake “alternate” electors from states he didn't win.
It was a whole coup-y thing.
But there was something else.
Those same sportsbooks left their “betting markets” open up until that date.
And took in a lot of money (largely on Trump to win an election he’d already lost).
On the other side, you could bet Biden to win the election (again, after results had already been confirmed) at an implied 88% chance.
This year, there's a similar pattern emerging.
Biden nomination odds
I'll leave my personal political feelings regarding age and candidate quality out.
Suffice it to say: Biden won in 2020, Dems have had some good wins since, and Biden has been pretty clear that he plans to (and will) be running in 2024.
The party, logically, has gotten behind their incumbent with support. Aside from a few fringe and currently unsuccessful runs, Biden doesn't appear to be in any danger whatsoever to actually lose the primary.
So
What's with this?
The same site again, having changed their odds (to say it's even less likely Biden wins the nomination!)
The obvious answer, without being too crude and to borrow a sports term, is that sometime in the next 7 months (between today and DNC official nomination)
Is that Biden becomes PUP (physically unable to perform).
The odds of that happening, of course, is greater than 0.
But is it 25%?
No.
The odds of a male Biden's age - the average male - dying within a year is about 7%.
That number is higher than I expected, but far less than the 25% number implied by sportsbooks.
It also doesn't consider the fact that:
Like him or not, Biden is far healthier than the average male his age (probably healthier than the average male 10 years younger)
He has access to unlimited and constant medical care
Both of those facts should make even a 7% chance look laughable.
But again, these sportsbooks aren't just for fun. You can get four to five-figures of action down on this (in a legal jurisdiction, of course).
It's hard to believe, but it's true:
The markets are just irrational.
These are the same markets that bet lots of money on Donald Trump JUNIOR to be the next president…and the sportsbooks are happy to take it.
Not to mention the, um, clear partisan lean of these bettors.
In short:
Will Biden lose the primary in which he is nearly unchallenged, or not make it to the convention?
The markets seem to have priced Biden not making it to the convention aggressively. Incorrectly, but aggressively.
Then, they turn around and offer this:
The odds on Biden finishing his first term, which will end in January, are apparently far more likely (88%) than he is to…be the nominee…in August (75%).
I would say “make it make sense”
But there is no making it make sense. It's just wrong.
Market inefficiencies are where people who are good with numbers can make lots of money.
In legal jurisdictions, of course.