Oddsmakers betting big on Trump a week from election

Opinion polls in the presidential election are just now starting to swing toward Donald Trump, but the online political gambling markets have been betting big on the former president for weeks.

A week before Election Day, Polymarket, a leading platform, has Mr. Trump a 2-1 favorite to win the election — his best odds since surviving an assassination attempt in July.

At Kalshi, a U.S.-based election prediction market, Mr. Trump was tied with Vice President Kamala Harris earlier this month but now has better than 60% odds of winning.

So what gives?

“The message I get right now is the markets are moving in Trump’s favor; they’re favorable to Trump, but they’re not a slam dunk,” said Koleman Strumpf, an economics professor at Wake Forest University who has studied the markets for years and says they are usually on the right track.

A court gave Kalshi the green light this year to become the first largely unhindered U.S.-based operation.

Mr. Strumpf said polls ask random voters about their sentiment at that moment, but the markets ask a self-selected group of people with at least some financial means who they think will win.

“To me, the markets are always asking the question I’m interested in,” Mr. Strumpf said. “At the end of the day, I don’t want to trade in these markets, but I do want to consume the information.”

Kalshi has bets on multiple contests, such as which presidential candidate will capture the national popular vote, the winners of Senate races and which party will control the House.

The dominant question is who will win the Electoral College. As of Sunday, Kalshi reported nearly $82 million in bets placed.

Ms. Harris’ dropping odds have sparked waves of hand-wringing on social media. Some in left-leaning circles are sharing accusations of market manipulation and attempts to skew the election.

Kalshi, perhaps hoping for more betting, gleefully tells them to put their money where their keyboard is.

“So if you think the Harris price is inaccurate, stop running your mouth and make a trade,” Kalshi’s Terry Oldreal chided the doubters.

Skeptics say the markets are too small right now to be a good predictive tool and are too easy to manipulate.

A group of researchers led by Yale University’s Jeffrey A. Sonnenfeld said it tried to bet on some key races only to find “zero sellers in those markets.”

“All this means that the so-called price cited by media accounts is merely a phantom figure and not representative of reality,” they wrote.

Even in the overall presidential election, the researchers said the daily betting tops out in the lower hundreds of thousands of dollars, which means a bet of a few thousand dollars can quickly swing the odds several percentage points.

Perhaps the most contentious area of debate is the researchers’ claim that the markets have a poor track record of predicting outcomes.

Mr. Sonnenfeld and his fellow researchers said the leading prediction market in 2012 had Republican nominee Mitt Romney with a slim edge over President Obama. In 2016, Democratic candidate Hillary Clinton was the large favorite. In 2020, one platform gave Mr. Trump the edge with a late surge in betting. In all those cases, they were wrong.

Mr. Strumpf said polls are often worse. In 2016, Mrs. Clinton led at least 5 percentage points in the final Real Clear Politics average of polls for Michigan, Wisconsin and Pennsylvania. She came up short in all three states while losing the White House.

Real Clear said gamblers were just as bad. A week before the 2016 election, Mrs. Clinton was a better than 4-1 favorite.

In 2020, Real Clear said Joseph R. Biden was nearly a 2-1 favorite over Mr. Trump a week before the election. He went on to win handily.

Mr. Strumpf has studied more than a century of political markets, including when investors gathered outside the official financial markets in New York to bet on election winners. He said the markets were “super accurate” in picking the outcomes before modern polling in the 1930s.

He rejected the notion that allowing betting skews elections by changing how some people vote.

“In a century of data I looked at, I can find absolutely no evidence of this,” he said.

Michael McKenna, a pollster who served as a senior legislative aide in the Trump White House, said the markets try to answer one big question — who wins — but lack the nuance of polls, which can say a lot about why a particular candidate is leading.

“I have great respect for the wisdom of the crowds. I think that’s what markets are at the moment,” he said. “I think they’re a little faster than pollsters but not as precise.”

Three basic types of investors are in markets right now: deeply partisan Democrats, deeply partisan Republicans and people who are in it for the cash.

Mr. McKenna, who also writes a column for The Washington Times, worries about a future when people with big bank accounts open the door to activities that can corrupt an election.

“It’s not going to stay that way,” he said. “Once the finance guys figure out there’s money to be made in being right, that the presidential election is essentially a commodity, they’re going to figure out a way to make money off of it.”

That is one of the worries of the Commodity Futures Trading Commission, which battled to block Kalshi from opening its election market this year. The independent agency took its corruption concerns to the federal courts but lost in district court, and the U.S. Circuit Court of Appeals for the District of Columbia rejected its initial appeal.

The judges said the commission could try to regulate election betting but must undergo a full regulatory process.