So here we are; several months since Joe Biden abdicated the throne and Vice President Harris and Governor Walz have turned the election campaign on it's head. If you watch the polls the democrats have turned the tables in several battle ground states and possibly reversed the trend in others and nationally. What I would give to be a fly on the wall in Trump or Harris campaign HQ. But let's not get over our skis - is this a sugar high, a honeymoon or an implosion? No way to know for sure. Besides, polls have been sketchy the last couple-three national elections; and I happen to believe that the outcome remains a tossup. So I want to speak to the subject of gambling, or wagering.
I've touched-upon this subject from time to time; sometimes from the POV of a financial guy and sometimes outright humor. Back in the first week of June I took a stab at a topic I had been reading-up on and listening about; a subject that I thought was maybe gonna gain some traction - that of actually wagering on US Elections. With every passing week it seems to be gaining traction now that we have a real competitive campaign.
For some time government regulators with oversight on Wall Street have been trying to clamp down on growing election wagering in the US. With a completely reconfigured presidential race a tsunami of trading on this fall's election has taken-off. At the time of the publication of this post, traders (gamblers) favor Harris over Trump.
PredictIt, formerly a largely academic pursuit and now off-shored was witness in July to its busiest wagering volume reaching roughly 120 million contracts - a spike of more than 500% over June. $1.1 billion has been bet on crypto-based Polymarket since June, according to Dune Analytics, and 88% of that has been political bets on the U.S. election.
Consequently, this has the increased attention of the Commodity Futures Trading Commission (CFTC) who has proposed rule-making that would expressly outlaw wagering of this sort with scattered support in the US Senate.
As a recovering financial guy with almost forty years in the wealth management biz I've seen more than my share of feeding frenzies in the equity, fixed-income, commodities, futures and other derivatives markets; and market bubbles, more often-than not, end badly. After-which seasoned veterans, put on their boots, roll-up their sleeves, slip-on their autopsy gloves and sift thru the bloody detritus of mostly novice online traders who got themselves slaughtered chasing phantom profits.
Markets always correct.
Nevertheless, none of this is outlawed or banned. Financial markets are regulated and there is ample opportunity for the unguided to squander their savings on dreams, brass rings or Pumpkins and Mice. The CFTC needn't ban wagering on election outcomes as much as they might regulate them with reasonable guardrails just like any other market.
The UK has grappled with their own tempest in a teapot with the revelation that some conservative members of parliament got caught placing bets on the timing of their recent snap election. Did it impact the July 4th outcome? Who knows? Considering the level of outrage when this got found-out it's entirely possible. Should politicians be barred from betting on elections? Or allowed to do so at their own political peril?
A week and a half ago, a federal judge cleared the way for Americans to place bets on the outcome of congressional elections via a prediction-market startup. A ruling that may potentially expand further legalized wagers on elections in this country.
Wagering requires bettors to put their money where their mouth is. Betting markets may be useful when politics are chaotic. With skin in the game facts displace misinformation.
Posts
No comments:
Post a Comment