The Iowa Caucus officially kicked off on Monday for what's likely to be another hotly contested presidential election.
While polls often shape the narrative heading into an election cycle, betting markets have become increasingly more popular — and in some cases, paint a more accurate picture.
“The general theory is that when people have skin in the game when they've got a little bit of money on the line, it clears their head, they forecast or predict with their head rather than with their heart,” said John Aristotle Phillips, founder and CEO of PredictIT, one of only several places to legally gamble on elections in the U.S.
Bettors want to make money, and that means betting on the candidate they think is most likely to win — not who they want to win.
“A survey or a public opinion poll or even pundits, they talk about what you want to have happen. A market is what you think is going to happen and that's two different things. I may want this outcome, but I really think that this is what the outcome is going to be,” Phillips told ABC15. “If I have to put my money someplace in a market where I have to forecast what the future is going to be, I'm going to be much more careful in terms of how I analyze all the information that's coming in.”
Betting on elections dates back to the late 19th century when pool halls served as honorary sports books. It later made its way to Wall Street, where money was exchanged under the table and helped shape American politics.
“The betting markets took place right outside the New York Stock Exchange. So, that's where newspaper reporters and others went, before the advent of polling, if they wanted to figure out who was likely to win the election,” Phillips said. “They would go there, and they would see what the odds are, what the prices people were willing to pay.”
Both the polls and the betting markets show former president Donald Trump and Joe Biden in a tight rematch. PredictIt has Trump leading Biden 41% to 39% As for Iowa, most polls favor Nikki Haley as the runner-up while PredictIt favors Ron Desantis.
Trump is trading at 93 cents, which is equivalent to 93%, followed by DeSantis at 6% and Haley and Vivek Ramaswamy at 1%, according to the latest PredictIt odds.
The betting markets offer another layer of insight into the mind of the voter — one that is backed by money.
“If I were consulting on a presidential campaign or any campaign and I had polling numbers in one hand and what the betting market was saying in another, I would take the betting market as a serious indicator,” said Stan Barnes, Founder and President of Copper State Consulting.
Barnes said there are benefits to polling, but “it’s imperfect.”
“It’s a science that’s worthy, but it’s imperfect,” Barnes said. “Part of the imperfection is people don’t tell the truth all the time and sometimes people give answers the pollster wants to hear.”
So, who are you betting on?
