Betting Your First Election

Some tips on how to think about your wagers

October 24, 2020

New to PredictIt?

We’re days out from November third, and maybe you heard you could make a little money betting on the election.

Perhaps you’ve always been into gambling and just heard about PredictIt, where you can do it legally. Well friend, you’re in the right place.

The breadth of PredictIt markets can be overwhelming at first, especially right now, which is probably the hottest activity period the site has seen since 2016

There are so many markets to trade, so many electoral outcomes to predict, and no matter how much you deposit there’s not money in your account to cover it all. How do you wager your funds in the smartest way possible?

Well, first you will definitely want to hammer down the basics of PredictIt. Start here.

Got all that? Great, let’s take a look at some DO’s and a DON’T.

DO hold your shares till completion

If you’re reading this, you’re probably here to bet on outcomes.

Well, congratulations, because that is precisely the best way to maximize your reward/risk ratio for this election, especially for beginners.

I say this because we are already mostly through October, and there is still some serious guaranteed money on the table, waiting to be picked up.

I like to call markets offering this type of money sure bet markets; take a look here for more background on sure bets, and different types of markets.

I don’t suggest playing market swings as a beginner at this time, as the opportunity for low-risk returns aren’t as plentiful, unless 1. you really know what you are doing, or 2. you are planning for a black swan event, like another October surprise, or Trump testing positive for COVID.

When money offers us to take it, we oblige. We can start with markets predicting state electoral vote winners.

At the moment, the absolute, most secure bets with decent returns are Biden to win CO, NM, VA, which offer 11-13% before fees. Up until recently, there were similar returns for certain safe red states (MO, SC) as well, but at the time of writing PredictIt is in the midst of a Trump surge.

Speaking of a Trump surge, Biden-affiliated share prices are as low as ever and, in my opinion, as well as that of many sharps, offering unbelievable expected value this close to the election.

If you want to take on a slight bit more risk, I would suggest listening to the polls this time around and betting Biden will win in swing states of the midwest.

Start with Minnesota (72c) and Michigan (66c). Also Nevada (75c). And don’t count out the Senate markets, some of which offer similar opportunities (CO, AL, NM come to mind).

My goal here isn’t necessarily to tell you what to bet on, but, in my opinion, these are examples of safer bets than their share prices indicate.

That said, if you are more comfortable with 10% returns in less than two weeks, then I can’t blame you. It is more than you will get from the stock market, after all. Speaking of which…

DO compare returns to other investment vehicles

PredictIt offers that rare opportunity where the markets are still inefficient enough that you can obtain consistent, solid returns for relatively little effort and risk.

I like to compare my PredictIt market returns from what I could be getting from stocks, bonds (lol), and real estate investing. This gives me a benchmark from where I can decide if a wager and timeframe are worth the potential returns.

For example, if you invest in an S&P 500 index fund, you can expect around a 10 percent return annually. Right now, PredictIt is offering that same return (and honestly, much better) in less than two weeks.

Yes, the market is surging higher every day, but with this comes fears of overvaluation, and bubbles popping. Some speculate the election outcome will bring on a market correction. I’m no professional investor, but in my opinion these possibilities lend a greater element of uncertainty towards buying stocks as of October 2020.

Residential real estate returns may be better over the long term, and yet while these can vary wildly based on the situation, you also have to manage all the bullshit that goes along with owning a property and paying mortgage.

On PredictIt right now, you can just clicky-click and boom, two weeks later the equivalent of a coronavirus stimulus check gets deposited into your account.

Don’t even get me started on bonds, or any interest-based vehicle for that matter. Have fun watching your nonexistent income standing on the sidelines, powerless, while inflation slowly eats away at your hard-earned cash.

This is why I say it is totally okay to go for safe 10-13% returns if you want. No matter what, PredictIt is handing you an opportunity that I can guarantee you will not see again in a fiscal environment like this.

Finally, DO NOT plan to actively trade on November 3rd

Seriously, do not. It has the potential to screw up whatever trading plan you think you have.

I say this because election days are– understandably– when the highest percentage of users will be simultaneously active on Predictit.org.

In the past, sky-high web traffic has caused the site to crash, or at least slowed it down to the point where it’s unusable, and you can’t effectively place orders within a reasonable timeframe.

I’m talking a laggy interface, to the point where those attractively-priced shares you’re about to cop may have actually gotten scooped up several minutes ago.

To its credit, PredictIt has improved on these challenges in recent years, but I still consider it likely that traders will experience some sort of problem with the site on election day.

Think of it as a DDoS attack without the malicious intentions. As a software engineer myself, I understand the challenges in equipping a website to see its active user count spike several orders of magnitude higher on a single day.

PredictIt happens to be one of the few sites experiencing this challenge due to the very nature of the political timelines on which its markets depend.

So, to be safe as possible, make sure all your positions are locked in ahead of November 3rd.

Remember, we are betting on outcomes, so as long as we’re confident in our positions, and the +EV they offer, there’s no real need to trade in and out of them hours before they are resolved.

If you haven’t set up your positions yet, do so as soon as you can, and hopefully this article will be of some benefit to you. Happy trading!

Curious as to which markets I'm betting in this election?

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