Betting The Presidential Election

There are a few ways to bet this. You could go to the Greek or some other book and bet on somebody to win. OR, you could go to WSEX or (my favorite) Matchbook (MB) and bet the candidates to win or lose at prices that you set through a normal bid and ask exchange process. You make an offer at a price you want and if somebody takes the other side, you have action. If the price moves in your favor later, then you can offer to sell your position and cash out. Buy today, sell later today. It's all very easy to do. Here is an update from a guy who is playing it. I'm a little late to this game, but I'm playing it now. A lot more action to come. Who I think might win is irrelevant in this game. I'm not bettting this based on my beliefs, but based on value and against whomever and wherever the media is pushing public opinion.

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There was big money made yesterday on the exchanges going against the grain -- intra-day volatility was huge. Anticipation and accurate reading of conventional wisdom is the game. You could've bought Hillary Monday or yesterday morning on MB at close to +300 and sold her today at -135. Vice-versa on Obama.

Excessive volatility is what is creating opportunity, no matter what your political stripe. The real fun (and money-making opportunities) are going to be on the Republican side, as none are going to separate themselves from the pack and the polls are exceptionally volatile. Markets are reasonably liquid, but you have to lay offers out or be paying attention when offers come up because spreads are big and good deals don't last long. I'm finding I can trade mostly at the ask side of the market

The talking heads and polls are your best friend right now, because they move the market, regardless of the validity of their commentary -- and most of it is total BS, a product of too much air time and too little new content. So they feed off each other and create remarkable cases of groupthink. All day yesterday, it was "ding-dong, the witch is dead" and today it's the Comeback Kid redux.

The best part is that most of the media is so out of touch with the Republican base or mindset (including a lot of the numbskulls on Fox, even) that they keep trying to rationalize why so-and-so is gathering momentum, when, if fact, there's no real enthusiasm for any of them. Opinions (and prices) will change with the wind as everybody tries to be the first to identify momentum changes. A trader's dream.

So, today, basic strategy is to short McCain and Hillary, and go long the rest of the Republican pack and Obama. The rest of my plays I'll keep private because it is a parimutual market, but I share this much because there's room for more players and opinions. However, I reiterate the importance of being patient and trolling offers rather than sweeping the market, or else you'll pay for it on the flip-flop.

I think some of the best opportunities have passed, but here's how I've handled it thus far:

A lot of analysts began looking at futures and betting markets back in 2002, thinking that they could be a better indicator than polls of just what was happening to each of the candidates. Turns out they were wrong; markets tend to move on analyst opinion, not the other way around. Futures and betting markets are the tail, and not the dog.

I think the best play right now is Guiliani at +300 or so (or higher if you can get it) Everything thus far has pretty much broken his way, with splits in the early states, a likely Romney win in Michigan and a tough fight in SC between McCain and Huckabee. He's going to need a full field hedded into Super Tuesday, and he's going to get it. I'm of two minds as to when the maximum value is going to be. My optimum days are January 17th and 18th, just before South Carolina. Don't wait until the run-up to Florida on the 29th, because by then the common wisdim (CW) may very well have changed to "here comes the newcomer, surging ahead in Florida!" The best Guiliani scenario would show a (likely) Romney win in Michigan and a close McCain win in SC. If you're not as hopeful that all that will happen, the price is inflated right now anyway, so go ahead.

The Democratic side doesn't offer quite as much interest, betting-wise, because you're down to a two-person race now. If I were you though Coast, I'd hold off on Obama for a couple of days, for two reasons. First, the "Hillary comes back!" headline has some play left. Second, Hillary is the only Democratic candidate on the ballot in Michigan, because the other candidates protested or something or other. Anyway, the story won't be huge, but I do anticipate a lot of pseudo-savvy bettors telling themselves "Hillary's picking up a lot of delegates", even though that's not really the case. The market will then turn as they head towards Nevada, where once again the story will be the horserace. Then make your Hillary play, about a day or so before, or the day of, the Nevada caucus. The polling numbers are going to be unreliable for Obama from here on out- people just aren't willing to admit to pollsters that they're not voting for the second coming of the Messiah, but they're willing to change their minds in the voting booth. Except at the peaks of the price, betting on Obama is like betting on Indianapolis- you may win, but the line is inflated a bit and probably doesn't offer a whole lot of value.

Just my take.

For those of you still paying attention, now's your time to hedge and take Obama. I knew that +130 would improve.

Wait a day or two, then buy Hillary. The market is going to react sharply- probably too sharply, to the big Obama victory in SC. -150 or better should be good, though I think the price might get as low as -125 if you hunt a bit.

good advice. thanks. i don't have any billary in my portfolio. And I wish I didn't have so much Rudy in my portfolio that i bought with the expectation that I'd sell it after he won Florida. That isn't going to happen now apparently oh well, the money i made on romney before and after michigan and my mcain buy/sell more than covers my rudy losses.

The concept on betting on this stuff is interesting, however if there's a good buy on a candidate I dislike I can't imagine rooting for that candidate to be president of the US.

The trick is to set it up so that you win either way. This election cycle has been perfect for hedging back and forth. I misread the Republican race, where there was arguably even more money to be made, but I'm set either way in the Democratic race.

Ryan, I have a preferred candidate but have not bet on him. This is day trading, not investing. It's just a little more interesting to me than buying and selling pork bellies. This isn't about betting who I think is going to win...at least not for me. It's about betting the value that the media gives us by over-hyping or under-stating one candidate or another. After Super Tuesday, when I expect this thing to be pretty much decided, I probably won't have any open positions on anybody. I'll have closed them out and profited on the price swings.

Yea, I didn't understand it was day trading. That makes sense.