US election 2024: Are Betting Markets More Accurate Than Polls?
The Tight Race: Polls vs. Prediction Markets
The 2024 US Presidential election is neck and neck, at least according to traditional opinion polls. Kamala Harris and Donald Trump are practically tied, leaving many scratching their heads. But there's a new kid on the block: election betting markets. These platforms offer a different take; placing emphasis on predicting election results through analyzing the data; a methodology largely based on money actually being wagered upon, the outcome and how participants respond in the process of prediction.
Trump and his team are making a big deal out of these betting markets; and the various resulting probabilities given; highlighting Trump's significant lead over Harris (in those prediction markets, even suggesting numbers such as 65% to 35%). This is particularly interesting; considering these prediction numbers completely differ from the poll numbers which showcase much, much tighter, competitive results.
Trump's claim was particularly interesting; because the event at which he made this assertion involved specifically Christian voters– “nobody here gambles,” demonstrating some unique biases from this politician. Yet, for some audiences, the accuracy of traditional political polling remains heavily questioned. That distrust leads some, including high-profile names such as Elon Musk, to favor these predictions made available through various election betting markets. Some popular election prediction platforms are mentioned later in the article and showcase just how varied those prediction numbers can be; some significantly off those provided by regular opinion polls. All the evidence, reasons and controversies are discussed below!
Betting Markets' Booming Popularity: Why are people Turning to Election Predictions?
Platforms such as Polymarket (putting Trump at about 67% and Harris at 33%), and Kalshi (putting Trump at 62% and Harris at 38%) have gained huge traction as that distrust in traditional media, those traditional forms of communication; and their related information delivery have increasingly diminished amongst voters; as these platforms rise in the various rankings and even the media discusses them constantly.
That's noteworthy. Professor Thomas Gruca (University of Iowa, and director of Iowa Electronic Markets) calls the increase in election betting interest "orders of magnitude larger" than previous elections; adding an additional perspective to his statements by showcasing the "gambling boom", fueled by the legalization of sports betting – as many of those newly registered betters have attempted this relatively new and entirely novel activity using election markets. There’s something deeply appealing about that intuitive translation of sports bets to the complexity that makes a political election possible. The implications here go even deeper and are discussed later.
The Accuracy Debate: How Reliable Are Betting Market Predictions?
The headlines can be dramatic, suggesting very high levels of certainty. And the prediction that Trump will win remains significant across almost all mentioned prediction market platforms.
Professor Grant Ferguson (Texas Christian University) says we need to take them seriously; these betting markets usually contain individuals more familiar with these processes and outcomes. The accuracy however is a key concern; platforms successfully predicted Hillary Clinton’s 2016 win (popular vote) and Joe Biden’s 2020 win; albeit showing the margin at something smaller than was presented from other, traditional opinion polls. Those predictions don’t reflect certainty; even those seemingly incredibly specific, high percentage outcomes are always subject to limitations inherent in that specific methodology itself. 2024? That’s the huge test.
Professor Eric Zitzewitz (Dartmouth College) is surprisingly specific; stating how these markets tend to remain very accurate in scenarios of almost 50:50 or roughly 60:40 situations; highlighting why they are extremely suitable to reflect accurately those situations where a large range exists in predictions made through various methods; making these novel, novel and accurate. However this article continues by showing further examples that prove these markets aren't perfect.
The Manipulation Factor: Big Money's Potential Impact
The possibility of influencing the odds greatly affects accuracy and its trustworthiness. Platforms with fewer restrictions create environments allowing enormous bets that can significantly tilt the balance. Professor Gruca warns, when there are no betting limits "deep pockets" easily influence things. A significant example of that concerns the $28 million bet on Trump (by someone from France), highlighting how this could greatly sway predictions, something mentioned previously!
Another concern is that there exist instances where wash trading is attempted: the same individuals frequently buying and selling, falsely inflating volume and greatly distorting this market mechanism that could only be resolved through stringent regulatory oversight; which will possibly increase if and when more people become more and more wary regarding that increased presence and potential risks highlighted today, throughout this analysis.
Polls vs. Bets: Different Questions, Different Answers
Polling participants typically convey whom they want to win; yet those wagering often share their beliefs about whom they expect to win; a seemingly minor but profound change in what those data ultimately convey.
Professor Crane argues those betting markets present the "more relevant" question – highlighting that despite taking into account those traditional polls available, there also exist other, non-public information which can potentially affect what’s shown throughout those various prediction platforms; resulting in what is ultimately presented through betting markets differing dramatically from those results gleaned through polls; resulting in various scenarios and prediction results that cannot be simply reconciled with the limitations available when considering polling only.
Conclusion: The Future of Election Predictions
election betting markets are getting immensely popular. However their predictions should not always be completely accepted; many inherent flaws and problems do exist which would influence overall outcomes significantly and these weaknesses can result in scenarios which show unexpected, if unreliable information. While potentially informative alongside polling data; the increased possibility for manipulation by various wealthy actors must remain at the forefront. Further development, regulations and more scrutinous oversight could potentially become essential elements toward clarifying the validity of various claims regarding the methods that might become dominant, moving forward!
