The election is, for all practical purposes, over. It’s been a bumpy road getting there and if you’ve been betting along the way, you’ve had more than a few fearful nights. But it is over. Joe Biden will be the next president.
I asked a few of the top political gamblers what they learned betting this election cycle. Despite what you may think, even the best players in the game lose money and doubt their instincts too. Here are what some of the players have to say about mistakes made and lessons learned in 2020:
Profits take the stairs up, losses take the window down. If you carefully research a market and feel strongly that you have an edge, it should take much more than a brief shakedown to have you running for the exit. I used to have a rule in stock investing that I would only buy things where if it went down 10%, I would gladly buy more; PredictIt markets should be viewed the same way. We’re all too quick to see our profit/loss turn red and think “everyone must have known better than me this whole time”. This isn’t quantum physics; the gap between you and the experts is miniscule, and a couple hours scouring the internet is often enough to push you to the top of the heap. I have some incredibly bright family members, and once during a card game with them someone pointed out that every single one of us was playing like we were the lone genius at a table full of morons. Play PredictIt like that, it might be true.
To that end, here are a few things to remember:
- The polls being horrendously wrong will motivate people to continue betting on hopeless conspiracy theories. That’s good for rational traders in the long run.
- Latinos and other immigrants don’t become Democrats by default, they will need to be earned every election.
- The days of political parties being collectives of semi-independent thinkers are over. If the top brass talk about breaking the law to ensure further electoral victories, you back them up or you go pack your bags.
- Personal scandals are meaningless. If your party’s good ole boy is into naughty shit on the weekends, well at least he’s pushing your agenda during the week.
- This was the last presidential election in which audio/video of candidates will be useful evidence. By 2024 deep fakes will have improved to the point that they are no longer distinguishable from reality.
When I was laying out my electoral map for 2020 I knew it would be a fairly competitive race and would not be a blowout regardless of what almost everybody was saying all over PredictIt and Twitter. That being said, I had some nice wins and also suffered some loses but this is what I have learned along the way:
- Trump will always outperform expectations
- While trading, do not interact with degenerate cucks on twitter or on the predictit message boards as it could cloud your judgement
- Don’t be a mangina having punk bitch. When you see an opportunity, be decisive and bet big.
- Only trade when you are absolutely hammered
- Use common sense and trust your gut
There was a lesson we should have learned with the French presidential election of 2017: if a market appears to be irrationally priced and remains so for several weeks, it is not suddenly going to get wise. In that election, the price of Marine le Pen hovered around 20 cents and even climbed higher as we approached election day, despite atrocious polling data. Sadly, I was maxed on the NO side at around 85, watched my gain/loss sink further and further until she lost by 36 points and I finally got my money.
Holding states and the presidential winner in this year’s US General Election was even more inexplicable. There was no poll that could have made Biden a favorite in Florida, Georgia or North Carolina. Not even a +17 from ABC could take Wisconsin to 90. That also meant that one of the easiest ways to make money on PredictIt — buying a few shares, and then selling them when favorable news causes them to rise — was out of the question.
In this election, holding shares was 100% risk and no upside. Not only was the market unlikely to move in the direction of the Democrats, but Biden holders also had to suffer the fear that something could happen that would dramatically alter the trajectory of the race. We mapped out the scenarios: Joe getting COVID, Trump finding a “cure,” the mainstream media blowing up the Hunter Biden laptop story, but I think we lost sight of why we were holding in the first place. Biden reached his peak after the first debate and Trump’s COVID diagnosis. There was really no reason to think that things would get any easier for him as we got further into October and then November, and if the outlook wasn’t going to get better, there was no reason to assume his price would improve.
In this very irrational marketplace, holding was just a bet on whether the market would realize prices had been irrational in the past and would suddenly wise up as time ran out. And in 2020, we saw that that was a bad bet.
If you have a low risk tolerance, properly hedge your bets. In the 2020 election, I hedged by betting Trump would win Florida and be leading at 6am but Biden would win the election overall. With these hedges I felt confident I couldn’t lose both but had a good chance to win both (and did).
However, I had much more money ridin’ with Biden than I’m comfortable with and that resulted in PANUC selling some shares at a loss to reduce risk. My faith in Biden was influenced by polling. I bet that polling would miss in Trump’s favor (again to hedge) but the misses in states like Wisconsin were larger than expected.
I will continue to trust polling, but it seems polls are much likelier to miss in the extreme than I thought. The Latino vote going for Trump sometimes showed up in polling and I could have managed risk better using that information. Overall, I expect to win around $5k but should’ve made more.
Adapt. Yes, you should have a basic strategy, but be prepared to adapt and adapt quickly. For example, I went into Election Day 2020 expecting Biden to take it somewhat early and sorta walk away with it…That obviously didn’t happen–not even close. I was, however, prepared to adapt my positions and strategy accordingly, by selling out my “lock” positions (i.e. MI, WI, and PA), in order to ride the “red mirage” and acquire shares as cheaply as possible to cover losses and increase gains.
Whatever you anticipate happening, always be prepared to shift gears, which is the beauty of live trading on PredictIt.
Humble brag, but I had a pretty decent return on election night despite the predicted Biden Blowout not materializing. I’ll chalk this up to a few things: PTSD from 2016, betting biggest with what I know best and having a plan and sticking to it. I’ve never shaken being so wrong about 2016 and its made me a pretty cautious better ever since, with the worst case scenario always in the back of my head. So I avoided betting on 10+ margins and 280 EV wins. I put Texas and North Carolina on my final map because I saw the potential based on so many new voters turning up early, but that was overwhelmed by people showing up for Trump who he couldn’t get to show up for the 2018 midterms. I had a few hundred dollars in these states, but didn’t do the double max like I did elsewhere.
Betting on what I know meant going big on the blue wall states to come back. I’m from Illinois and I always saw the losses in my neighboring states as a fluke and function of apathy and disdain for the Clintons more than anything. Everyone from my dad’s high school dropout union buddies, my multi-degreed liberal friends and the guys on my block didn’t want to vote for Hillary. The working class Democrat base is very similar in the post-industrial Midwest and NAFTA truly is a dirty word in union households, which hurt Clinton. So did the crime bill. So did the perception that the DNC shanked Bernie. I don’t know if any of these people voted for Trump, but I know a lot who voted for Jill Stein or didn’t show up at all. There was tons of regret after Trump actually won and I knew this wouldn’t be repeated in 2020, so I felt confident to bet on Biden across the blue wall. Going on anecdotals might not be smart, but my intuition was also backed up by data and 2018 results in these states.
Betting on what I know also meant putting money in places where I could be confident in data outside of just polling. This is why I felt good about going big in Nevada, Arizona and Georgia. Each of these three places have people I trust reporting numbers (John Ralston, Garrett Archer and Ryan Anderson, respectively) that tell what’s really going on in the electorate in terms of geographic and demographic trends. I had no similar sources in other states and if I did I may have avoided Texas and North Carolina. Other data sources people were using like Target Smart were definitely helpful in some states, but were not predictive in others. Main point, using polls and early vote returns as a guide is necessary but gauging them against other available information is crucial.
This is also part of having a plan and sticking with it. I was all in on the blue wall states since basically Novembers 9th, 2016 and Georgia and Arizona since the 2018 midterms. Maxing or double maxing in these places tied up a lot of my bankroll semi-early (earlier than I planned since the summer protests and riots put them all on discount) and prevented me from chasing some shiny objects that wound up being losers. Luckily, the only Senate race I settled on investing in was Arizona. It also kept me from dropping maxes on lottos that I couldn’t dump while the site wasn’t working. I actually ended up depositing some dough into the site for the first time in four years, but that was only to put into markets that were basically free money. What I learned is that I probably should’ve waited until the day before the election to do this because MAGA money flooded the zone and ended up crushing prices by 10-15%. All of this allowed me to, I promise, not even check the site on election night once and wake up after about 3 hours of sleep to some decent wins. Which I of course sold at 90c.
PS…If this sounds too rosy, I also learned not to trust data I couldn’t see. I lost close to a double max bet on the Democrats gaining House seats based on pollsters talking about internal polls that I couldn’t examine myself.
Actually I don’t know what I’ve learned yet, other than that PI’s back end is complete ass (though I knew that anyway).
I am left with more questions than conclusions from the election results so far. The biggest question I have is why a blue wave did not materialize. Even more surprising to me than the Biden-Trump outcome is the resilience of vulnerable Republican senators—notably Susan Collins and Thom Tillis. I wonder if there is an insight here related to incumbency advantage?
Perhaps the most revealing thing about the election has to do with PredictIt itself. Not only was election day trading virtually impossible, but the site also repeatedly crashed after election day. It is hard to imagine that a meltdown of this scale could happen in the absence of far more serious managerial and technological shortcomings. PredictIt deserves a great deal of credit for bringing back political gambling after Intrade’s collapse. But it seems to me that competitors like Polymarket, which functioned well throughout the election, are poised to replace PredictIt as the premier site for political gambling.
There’s a lot of innate biases to overcome in predicting, and hindsight bias is near the top of the list.
Two examples here. With hindsight, I think my betting Biden to win Florida at 55% odds was a bad bet (he closed near 40% which is probably closer to a neutral bet). Biden didn’t justify his 55% pricing, even after you account for realistic possibilities like Latinos in Florida being friendlier to Trump than polling would otherwise indicate. The state is simply trending red, and betting on Biden in Florida was betting against that trend. Pollsters suck where Florida is concerned.
On my second loser of a bet — which arguably looks far stupider — I think was far more correct of a bet to make. Biden to win by more than 280+ electoral votes closed somewhere around 8% on election day, with the price I paid being 5-6% (I didn’t sell it). This did not come close to happening.
Was it wrong to make this bet, though? Just as it was that polling missed tons of Trump voters in the upper midwest that rendered Wisconsin, Michigan, and Pennsylvania much closer than the polls thought — with Ohio and Iowa being far less close than anticipated — the opposite could have been true. That’s a trite way of putting it, and the true explanation would involve a lot of math and poker analogies, but it’s still true — errors happen all the time! Someone betting in that same market on polling errors happening in Trump’s direction would’ve made a huge amount of money.
Secondly, It’s important to bet on things that people do not expect to happen, even if they don’t end up happening. You simply have to be reasonably correct that the event COULD happen at a higher chance than the market indicates.
Third, be wary of the crowd swinging hard in one direction. Betting markets can move like a wave pool of groupthink, and it’s important to resist the temptation to be swept along with the crowd. It is not always the case that the TRUE odds are changing as quickly or as drastically as everyone else thinks they are. People tend to overreact to the very latest piece of information, a variation on recency bias. What we saw on election night as Florida came in was a drastic underperformance by Biden, and Trump’s odds to become President surged past 50% and hit as high as 80%+ in the betting markets. A nationwide, gigantic polling error was now the expectation of the market. I made some large offshore bets on Trump at 2-1 odds as Florida hit, because the markets had it directionally correct. Florida was nothing short of a disaster, and a harbinger of doom for Biden’s chances.
But Florida is just one state, and it’s a bit of a weird state at that. As precincts in other parts of the country started coming in, one could ascertain that the miss in Florida was going to be disproportionately worse than many other key states like Arizona and Georgia and the Upper Midwest. It was realistic to uncover this even as Trump continued to spike in price, and for one to bet AGAINST the tsunami wave-pool of Trump money that was pouring in with the Florida panic. As I did — thank you very much :-).
Always trust in Zoltar. Also, everyone is full of shit.