“Prediction markets” call the 2016 election based not on polling data, but on who bettors predict will win the presidential race, and these online gambling sites, experts say, have compiled a more accurate record of correctly predicting election winners than polls — or any other method of forecasting the winner of the presidential race.
And in what would come as a surprise to most pundits who follow the “horse race journalism” model of political reporting, the smart money in the prediction markets is not being wagered on current polling frontrunner Donald Trump or even on second-place contender Ben Carson — or even on former Hewlett-Packard CEO Carly Fiorina who got a polling bump from her performance in the most recent Republican candidates debate.
According to bettors who are willing to put their hard-eared money down on their predicted candidate, the 2016 Republican presidential nominee will be 44-year-old Florida Senator Marco Rubio.
In a recent poll, conducted by NBC News and The Wall Street Journal, Rubio grabbed just 13 percent of Republican primary voters, compared to 25 percent for Trump and 22 for Carson.
But bettors on the leading prediction market site, PredictIt, where gamblers lay down their bets in the form of a stock-market-style purchase of “shares” in a candidate, have installed Rubio as a clear favorite, with shares in a Rubio victory in the Republican primary race selling as high as 40 cents on Tuesday of this week, compared to second-place Jeb Bush a full 10 cents behind.
The PredictIt bettors place a much lower value of Donald Trump’s chances, trading his shares at just 23 cents as of October 20.
Gambling on presidential elections, or any elections, remains illegal in the United States. As a result, most prediction market sites are based overseas, often in the United Kingdom, where U.S. elections are seen as entertainment.
PredictIt sharply restricts the amount of money that bettors can “invest,” and the site — based out of Victoria University in Wellington, New Zealand — is set up for an “educational purpose,” the site says.
Why are prediction markets said to be more accurate than polling when it comes to predicting election winners?
“People who bet in significant sums on an election outcome will usually have access to all the polling evidence. They take into account past experience of how good different pollsters are, what tends to happen to those who are undecided when they actually vote, and what might drive the agenda between the dates of the latest polling surveys and election day itself,” according to Leighton Vaughan Williams of the Nottingham Business School’s Political Forecasting Unit in the U.K.
“All of this is captured in the markets but not in the polls.”
So, Marco Rubio will win the 2016 Republican nomination, according to the prediction markets — but does he stand a chance in the general election against the Democratic nominee? And for that matter, who will that Democratic nominee actually be?
The latest PredictIt market prices leave little doubt about the answer to that question — and other prediction market sites agree. Hillary Clinton will win the nomination in a runaway. Her shares on PredictIt traded at a whopping 67 cents on Tuesday. The second-most-preferred candidate, according to PredictIt bettors, is not even in the race.
That would be U.S. Vice President Joe Biden, trading at 27 cents — though bettors are also pretty sure that Biden will join the Democratic primary race, with shares in “Yes, Biden will run” trading at 71 cents compared to 29 cents for “No.”
The CNN Prediction Market — which is free, using only hypothetical money — gives Clinton a 74 percent shot at winning the nomination, while the Ireland-based site Paddy Power puts Clinton in the lead for both the nomination and to win the White House in November, 2016.
Do prediction markets give Marco Rubio a chance of beating Hillary Clinton in the 2016 presidential election? The answer is — not a very good one. On PredictIt, shares in a Clinton general election victory sold for 48 cents on Tuesday, while a Rubio victory traded at just 22 cents.
[Featured Photo By Isaac Brekken / Getty Images]