Member-only story
Inside the Wild Stock Market for Politics Where Traders Bet On Our Next President
How PredictIt turned a chaotic election into a haven for political junkies looking to make a buck
Right now someone, somewhere, is trying to make money off the latest news cycle. When the coronavirus pandemic began sweeping the globe, people began flipping hand sanitizer, while fashion brands pivoted to selling masks. When nationwide protests against police brutality and systemic racism erupted in the wake of George Floyd’s murder, some retailers saw an opportunity to sell merch, such as Black Lives Matter–themed wine stoppers and garden gnomes. And when President Trump tweeted on October 2 that he had tested positive for Covid-19, traders looking to earn quick cash on yet another campaign hiccup turned to PredictIt, an online prediction market where people buy and sell shares of what are essentially futures contracts for political events like elections, nominations, and presidential pardons.
I was one of them. Around 1:00 in the morning of October 2, I checked my phone one final time before going to bed and saw the news. While the rest of the waking world lit up social media, I lay in bed frantically refreshing PredictIt. There, prices were rising for bets that Mike Pence or Kamala Harris would win the presidential election — some traders were presumably considering the possibility of Trump having infected Biden at the debate earlier that week and either candidate dropping from the ticket. I followed the spike for a few minutes before jumping in to buy shares of both VP candidates, hoping to sell them off later that day as more traders heard the news and drove a second spike. Instead, the spike was already nearing its peak by the time I invested; I bought high and was stuck with more than 200 shares whose prices plummeted back to reality by the time I woke up.
Political chaos is generally bad for markets. That is, unless the markets are specifically designed to quantify political uncertainty, as PredictIt is…
