Because no one is allowed to have any fun, gambling on politics is largely illegal in the United States, unless you're doing it on one of the very few approved betting markets political scientists and others use to observe public opinion. On sites like PredictIt, you can see which events bettors regard as likely to happen—the prices at which outcomes are bought and sold fluctuate based on how many (and how much) gamblers are betting on them, just as shares on the stock market rise and fall.

More interesting, though, is the opaque process of traditional betting operations that spit out betting lines on political events the same way they set lines for football games. A while ago I started to get PR emails from a company called BetDSI announcing that Donald Trump was favored to be impeached by 2020, among other outcomes its oddsmakers had come up with for people to bet on. Sometimes the events you could wager on were absurd, like who would be added to Mount Rushmore, but they also offered odds on the 2020 primary that made me wish betting on politics were legal. As I write this, Beto O'Rourke is the favorite in a crowded field at +500 (meaning you would win $500 on a $100 bet), while Kirsten Gillibrand seemed to me like a good deal at +1,600. If you're so inclined you could also bet on George Clooney winning the 2020 election (+7,500) or John Cena declaring his presidential candidacy (+990).

Curious about how these numbers get generated, I emailed questions to BetDSI's spokesperson, who passed them along to the oddsmakers. They, in turn, answered as a group, offering insight into how they try to avoid letting personal passions get in the way of cold calculations about the future.

VICE: How do you decide to offer a potential John Cena announcement to bettors? That seemed like an odd one to me.

BetDSI: We actually offer novelty odds across the board... sports, entertainment, politics, technology, finance, anything. Should Jerry Jones or Jimmy Johnson be on the list for next head coach of the Dallas Cowboys? Absolutely not, but they're on there because people will bet on them. We'll put up odds on anything we believe can attract attention.

What is the process of setting odds for political bets like?

The process of establishing odds for political positions is the same as any sport. Oddsmakers rely on research, objective/subjective analysis, precedent and perception. Knowledge of the event is based on research, analysis and past experience, which allows for modeling. How the betting public is going to react to the odds is where perception comes in. Oddsmakers must anticipate what kind of action a bet will attract and then adjust the numbers as needed.

Here are some political examples and explanations:

For the House, there isn’t a lot of great polling on the district level, so we have to do some back of the envelope math using the number of seats vulnerable in each party (varying by “safe,” “lean,” and “toss-up”), number of incumbents running by party, the generic ballot [polls gauging national Democratic vs. Republican sentiment], and a couple other variables to calculate an expected number of seats won by each party. From there we fit a distribution around those expected values and run several thousand simulations to estimate probabilities of outcomes.

For gubernatorial and senatorial races, there is generally some polling, so we use polling averages and fundamentals like partisan lean, incumbency, and national dynamics to estimate vote shares for individual candidates, and again run several thousand simulations to estimate probabilities for individual candidates and for the overall Senate.

For bets where there isn’t any data to use for modeling, it is just subjective analysis. These are the most difficult because there is a lot of information asymmetry between what is public and what is known only to relevant actors. This requires reading a lot of articles and trying to gauge public opinion. From there, you got to decide whether something is likely, kind of likely, or a toss-up and assign a probability accordingly.

How many people actually bet on politics as opposed to sporting events?

Wagering on politics is a tiny portion of the total betting handle. The ratio of NFL bets to political bets is about 900:1. That said, we certainly see a much higher volume during election periods, and during those times political bets can exceed major sports like hockey and basketball.

BetDSI has Beto O'Rourke as the favorite to win the 2020 nomination right now. I assume that has changed a lot in the past few weeks as hype for him builds. Are changes in odds a reflection of you closely following the news, or is it more because a lot of bettors are suddenly putting money on him?

It’s a mixture of both. Certainly, aligning with media hype in a very unknown market such as this is advantageous for a number of reasons. And yes, we do move odds based on betting action from our customers.

But I wouldn’t put too much stock in odds this far out from candidates officially declaring. Prices become more efficient as you get more information and move closer to the event because there is less time for shocks to occur. Also, there is a lot of uncertainty when there are so many candidates, which complicates analysis.

"You could watch cable news 24/7 and you would have a worse understanding of what is going on."

How do you get this job of setting odds for political events?

One of our political traders comes from the John Hopkins graduate school of international studies. Another has an educational background in mathematics with a masters in economics and mathematical finance.

What is your media diet like? I assume you must read and watch a lot of political coverage.

Quality over quantity is important here. You could watch cable news 24/7 and you would have a worse understanding of what is going on because it contains a low signal-to-noise ratio. The NPR Politics Podcast is good for keeping up with what happened this week in politics, but deeper dives about underlying trends are more important. FiveThirtyEight provides longer-form pieces on those topics, like gerrymandering and changing demographics of political parties. For big breaking news, newspapers such as the Financial Times or Washington Post are good resources.

Do you feel like you have more insight into US politics than most people?

Yes, because politics is background noise for most people. Most people have neither the time nor the inclination to follow the fire hydrant amount of information coming at them regarding politics. We know the general public and media outlets generally exaggerate the reality of any situation, so there is generally value in fading consensus opinion.

Compared to politically engaged people, we would say our guys are better at analyzing politics because they are better at checking their biases when making assessments. Oddsmakers can't do their jobs based on emotion—they must be nonpartisan. Otherwise, they'll be wrong more than they're right.

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