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Prediction markets have an elections problem

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Re: Prediction markets have an elections problem

#171

Post by baobabKoodaa »

dataflow wrote: post #162
mikeyouse wrote: post #161

Earlier quoted context omitted.

With any understanding of how GDP is measured / reported, there's no contradiction at all.. I'm honestly confused what you're finding so misleading about this particular bet.

Is the difference between "Will the US economy hit 5.0%+ GDP growth by year-end 2020?" and "Will the US economy hit 5.0%+ annualized GDP growth in any quarter in 2020?" really that hard to understand? Any sane person will tell you "Will the US economy hit 5.0%+ GDP growth by year-end 2020?" means GDP at the end of 2020 will be at least 5% higher than it was at beginning of 2020 (unless there's an explicit starting po…

If it was really as clear and obvious as you claim, then please explain while the exchange felt the need to add a very visible disclaimer explaining the terms?

Re: Prediction markets have an elections problem

#172

Post by Marazan »

fulladder wrote: post #35

The author does not understand bid-ask spreads, does not understand distortions created by fees, does not understand that the last trade price is not the same as what you can get at present, and just generally does not understand the realities of trading in markets. This article is a zero-information void.

On Betfair, which has miniscule fees compared to predictit and effectively unlimited wagering caps, the same "You can bet on Joe Biden to win the election weeks after Joe Biden won the election" phenomena existed.

Political Markets are filled with dumb money and not enough sharps. They are absurdly profitable to bet in bit are not frequent enough for pro gamblers to focus on.

Re: Prediction markets have an elections problem

#173

Post by vintermann »

Political campaigns spend billions to make their candidate win. We know that one of the most important things in order to get a candidate to win, is the perception of strength.

There's the theoretical risk of complacency, that people don't turn up to vote for your candidate because they think he will win anyway, but in practice that seems to be more than made up for with discouragement on the other side - especially on the donor's side. Voters may be willing to turn up to cast a vote of defiance, but self-interested donors will not throw money at a candidate who won't get in a position to reward them for it.

So if people are paying attention to prediction markets at all, why wouldn't a campaign pour money into it to create the perception that their candidate is doing better than they are? Betting on a statistically impossible walkover win isn't a problem if your goal is to create the impression of fanatic support anyway.

There's not that much money in these markets, so it shouldn't take all that much money to move them, in the scale of a US presidental election.

Re: Prediction markets have an elections problem

#174

Post by cabalamat »

tshaddox wrote: post #112
mattmaroon wrote: post #67

I am a former professional gambler and now I don’t gamble much, because I have neither the time nor interest to find good wagers, but what I do is on predictit. Being a great gambler mostly means not gambling until you have an edge, and what he says about and market being less accurate than 538 is true in my experience. I’ve been betting on there every couple years for maybe ten or so, it’s held up well. As many ment…

> But even then, you bet 93 cents to win 7 and then pay 5% on cashout so it wasn’t exactly making people rich. Don't forget the risk of the whole prediction market ceasing to exist or doing something blatantly fraudulent.

Indeed. Couldn't the whole article just be replaced by the phrase "transaction costs"?

Re: Prediction markets have an elections problem

#175

Post by dataflow »

baobabKoodaa wrote: post #171
dataflow wrote: post #162

Earlier quoted context omitted.

Is the difference between "Will the US economy hit 5.0%+ GDP growth by year-end 2020?" and "Will the US economy hit 5.0%+ annualized GDP growth in any quarter in 2020?" really that hard to understand? Any sane person will tell you "Will the US economy hit 5.0%+ GDP growth by year-end 2020?" means GDP at the end of 2020 will be at least 5% higher than it was at beginning of 2020 (unless there's an explicit starting po…

If it was really as clear and obvious as you claim, then please explain while the exchange felt the need to add a very visible disclaimer explaining the terms?

"It" as in the actual title they used? It was damn clear, it didn't need any clarification aside from the data source and the starting point of the measurement.

"It" as in their intended title? It obviously didn't match what they wrote, hence the "clarification". Not particularly different from how politicians frequently "clarify" that by X they actually mean not-X...

Riddle me this: imagine your convince your spouse to pour all your joint savings into a $1M home because its value will hit 5%+ growth by the year's end. And then at the end of the year it turns out your home is now worth $500k, after briefly dipping down to $400k in Q3. On a scale of 1 to 10, exactly how amused do you think your spouse would be to find out you actually meant "annualized quarterly growth rounded to the nearest tenth of a percent"?

Re: Prediction markets have an elections problem

#176

Post by Marazan »

I'm going to talk about political gambling but I'm not going to talk about PredictIt.

PredicitIt is irrelevant to the conversation. It's high fees an miniscule limits completely distorts what is "rational" or "reasonable" to expect the market to do.

Betfair on the other hand is a reasonable thing to talk about. 2% fee on net winnings on a market and zero deposit or withdrawl fees makes it a pretty efficeint market for political betting.

The Betfair political markets are dumb as a bag of rocks and there simply isn't enough smart money to suck up the dumb money. Political markets are incredibly thin, the average India Premier League cricket match gets way, way more action than all but the very largest political markets. The 2020 Presidential election was fairly unique in that the majority of the money was wagered after the election happened and after it was clear Biden had even. Idiot Trump supporters buying into conspiracy theories flooded the market with money.

Political betting is very easy _but_ compared to sports gambling there is no where near enough events to make a living doing it. It's all very well having a huge edge (and betting on a even that has already completed is the largest edge you could ever have) but if you only get 1 betting opportunity a year that's not a way to make a living. It is a great way to have some fun though.

Even in 2016, two days after the election, Clinton was @1.05 to win the popular vote. Right now on Betfair, despite almost £6 million having been traded on the market Michelle Obama is the 2nd favourite for the Democratic nomination @9.2 (that's a better than 10% chance). (For comparison about market size currently the Comilla Victorians vs Rangpur Riders match has over 4.5 million wagered).

Re: Prediction markets have an elections problem

#177

Post by Uehreka »

efitz wrote: post #65

The example the author gives is the 2020 election. Without rehashing anything or endorsing anyone’s viewpoint, there were lots of issues being raised, lots of court cases in flight, and possible procedural issues in the states and in the Congress related to electors and certification. The election wasn’t “over” until certification happened (late) on January 6. Why should bettors be prohibited from continuing to bet?…

Please, please, please keep advocating for this. I made hundreds of dollars in 2020, all of it after the election was called, buying Biden shares on states that had already been called at like 80 cents on the dollar, all of it from suckers who thought Rudy Giuliani’s court cases were legitimate. I’d love to do it again if Biden wins in 2024.

Re: Prediction markets have an elections problem

#178

Post by jakderrida »

ramesh31 wrote: post #165
mattmaroon wrote: post #67

I am a former professional gambler and now I don’t gamble much, because I have neither the time nor interest to find good wagers, but what I do is on predictit. Being a great gambler mostly means not gambling until you have an edge, and what he says about and market being less accurate than 538 is true in my experience. I’ve been betting on there every couple years for maybe ten or so, it’s held up well. As many ment…

Predictit during the 2020 election was just about the closest thing I've ever seen to free money. Shares for Texas going blue were still at $0.30 on election night. So many people wagering with their emotions and tribalism, it was unreal.

> Shares for Texas going blue were still at $0.30 on election night.

You think that's bad? Every month or so for like 6 months, there was another bet that the FBI was going to arrest Hillary by the end of the month and odds would be like between 7% and 13%. Every month, I bought more shares it wouldn't happen. The comments were all QAnon crap about the "The Kraken" coming. It was hilarious. Some of the comments were from me because I didn't want the gravy train to stop. Wasn't a full 7% return, though. Definitely lots of fees on Predictit.

Re: Prediction markets have an elections problem

#179

Post by baq »

smfjaw wrote: post #125
mattmaroon wrote: post #67

I am a former professional gambler and now I don’t gamble much, because I have neither the time nor interest to find good wagers, but what I do is on predictit. Being a great gambler mostly means not gambling until you have an edge, and what he says about and market being less accurate than 538 is true in my experience. I’ve been betting on there every couple years for maybe ten or so, it’s held up well. As many ment…

you took on the settlement risk and got paid for it, if you look into financial markets and central clearing and OTC contracts, central clearing/exchanges effectively get rid of that issue.

for a fee, of course. and collateral requirements.

Re: Prediction markets have an elections problem

#180

Post by baq »

chadash wrote: post #85
mike_d wrote: post #74

Earlier quoted context omitted.

> average predicted likelihood is frequently illogical What is being pointed out is that is not illogical when you fully understand it. I will let you bet me that Taylor Swift is not the current president of the United States. For every $1 you bet, I will return $1.05 to you*. You can bet as much as you like and as often as you want - my email address is in my profile. * 10% transaction fee applies

I’ll offer the same bet but no transaction fee. But it pays out on Jan 1, 2028

US government offers the same bet, except it settles April/May 2024, and is tax-advantaged.
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