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Election Betting Odds FAQ
Why trust these odds?
Studies find that political prediction (betting) markets tend to be better at predicting elections than polls. Some reasons:
- Bettors take into account important factors besides polls. In 2020, for example, the virus, mail-ins, and "shy voters" shook things up in unpredictable ways.
- Unlike pundits, bettors put their money where their mouths are.
- People involved in the event might trade before news breaks publicly
- The "wisdom of crowds".
Where does this site get its odds?
This site averages live odds that it pulls from FTX.com, Betfair.com, PredictIt.org, Smarkets.com, and Polymarket.com.
The odds are then volume-weighted, meaning that the odds for each market are multiplied by that market's share of quarterly volume. This way, the average doesn't give the same weight to a market with $10,000 bet, as it would to a market with $1 million bet; every dollar bet is treated appropriately as a dollar bet. Hover over candidate photos to see volume details.
By averaging all the available sites together, and volume-weighting, EBO's measure is particularly accurate.
How accurate has this site been?
We closely follow the bettors' track record over hundreds of races here. As you can see, when bettors say something has say a 35% chance, it actually happens about 35% of the time.
But betting odds aren't perfect. It has occasionally been very wrong, such as in 2016, when it gave Trump a 20% chance, and yet he won. Still, the 20% it gave him was higher than all but one of the much-touted statistical models, aggregated here by the NY Times. Despite some misses, the betting odds are the best single predictor one can look at.
How people bet - and is it legal?
American regulations are strict, but PredictIt.com has been allowed by the federal government's "Commodity Futures Trading Commission" and is easy to use. [UPDATE: In 2022, government regulators announced they were revoking the waiver they gave PredictIt, and ordered PredictIt to close by Feb 2023.]
Even while it lasts, PredictIt is not perfect; an $850-per-contract betting limit imposed by regulation means that long-shots are systematically overvalued on PredictIt. Additionally, the site charges a 5% fee to withdraw money. However, it was the only serious site that received a regulatory waiver.
Americans may NOT bet on FTX.com, Betfair.com, or Smarkets.com, or Polymarket. Many Non-Americans, however, do have the option of using such sites, depending on their country's gambling rules.
Why these odds are better than bookies' odds
All the sites we pull from are markets, meaning candidates' shares are traded just like stocks in the stock market, and the prices that result tell you the probability.
With bookies, one person or company could decide to set the odds at a certain place on a whim. Because bookies lack the transparency of true markets, they are excluded from this site.
Is there enough trading to give reliable odds?
Over $400 million was bet on the 2020 election. Millions were bet on 2022. Election betting has grown into a true liquid market, and its predictions are considered seriously by Wall Street and others.
How precise are these odds?
The average bid-ask spread is about half of 1%, meaning that a difference of less than that should not be viewed as particularly significant. Additionally, the markets themselves differ by a percentage point or two. We have added a new feature where if you hover over a candidate's face, a more detailed odds breakdown -- broken down by market, and showing the bid-ask spread -- will pop up. This should help users understand the precision level of the odds. Also see the heretrack record page to get a visual sense of the accuracy level.
Methodology *very technical*
Short answer: This site simply averages the market "bid" and "ask" prices to come up with the implied odds.
Long answer: The odds on the sites we track are not expressed as percentages and have to be converted. The conversion formula is 1/x, where x is the Betfair price. For example, on Betfair a candidate will trade at "50" -- that means the candidate has a 1/50 = 2% chance of winning.
ElectionBettingOdds.com converts the odds to percentages, and then averages them. Specifically, taking Betfair as an example, the formula is: ((1/Bid + 1/Ask)/2)
This generally gives intuitive results. For example, on Betfair, Chris Christie may have a "bid" price of "50" and an "ask" price of "25". In other words, the bid is (1/50)=2% and the ask is (1/25)=4%. It seems logical that the implied chance is the average: 3%.
When ElectionBettingOdds.com was launched, other sites that existed back then used what we believe to be a mistaken formula of averaging the Betfair numbers first. Their formula was 1 / ((Back + Lay)/2), which in the Chris Christie example above would yield 2.66% instead of 3%.
ElectionBettingOdds.com uses the simple averaging method because it most faithfully depicts the odds themselves without alteration.
One tricky thing is the rare occasion when liquidity is very low for a candidate. For example, one could imagine a candidate who has no chance -- so low that almost nobody is bothering to trade on the person's chances. In that case you might see a wide bid-ask spread. In the most extreme possible case, the bid might be 1% and the ask 99%. In that case the average would compute as 50%, which would be pretty clearly misleading for a candidate so obscure that nobody bothers to trade. It would not be good if this site suddenly put that candidate in the lead at 50% just because nobody was trading that person. The solution this site uses is: In cases where the bid-ask spread is greater than 10%, the bid alone is used, because it provides a solid lower-bound. In cases where the bid is greater than 50% and the bid-ask spread is greater than 10%, the ask alone is used. (These cases are extremely rare; the average bid-ask spread is around 1% and nearly all the time all of the candidates' spreads are well under 10%.)
Ownership and History
ElectionBettingOdds.com was created as a passion project -- simply because in 2015 there was no easy way to view election betting odds. At the time, Betfair was the only prediction market in the world that had a lot of trading -- but it expressed its odds in confusing gambling jargon. When ElectionBettingOdds.com launched in 2015, the site pulled from Betfair and was designed to translate the odds into a more readable format. Since that time, new markets have come online and have been added: FTX.com, PredictIt.org, Smarkets.com, and Polymarket.com. ElectionBettingOdds.com now serves as an aggregator of all the markets, providing the most reliable estimator. In early 2020, ElecitonBettingOdds.com was acquired by FTX Trading Ltd. The site continues to be managed and operated by Maxim Lott, and continues to objectively aggregate the odds from multiple sites.
UPDATE 11/12/2022: FTX Trading Ltd. has entered bankruptcy, and ElectionBettingOdds.com is one of FTX's assets. I plan to keep operating the site as I always have, as long as it remains feasible.
More questions or comments? Maxim Lott can be reached on Twitter here.
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