Prediction Markets

One could argue that prediction markets are better than opinion polls because prediction markets respond to all factors relevant to an election. While opinion polls try to anticipate the behavior of likely voters on election day, prediction markets consider voting practices and contingencies as well as voter intentions. Prediction markets can also reflect voter demographics and economic conditions.

Well-designed prediction markets provide relevant, up-to-date information, responding to all events in the public sphere. If a candidate gives an especially good speech or convention events play well in the media, prediction market prices respond. If a candidate misspeaks or says something that reflects poorly on his or her character, that, too, can move prediction market prices.

Anything known to the public can affect prediction market prices. That includes what traders learn from the media, what they hear from pollsters, analysts, and pundits.

A believer in efficient markets might say that political prediction markets reflect collective information across all people willing to place bets on the outcomes of political contests. Prediction markets reflect the wisdom of the crowd.

On Friday, October 9, 2020, about a month before the presidential election, Tom Miller was interviewed for Digital Planet, BBC World Service. Tom described election forecasts based on prediction markets. Portions of that interview were broadcasted on Tuesday, October 13, 2020.

Other than the limited Iowa Electronic Markets, it is uncertain which prediction markets will be operational in time for elections in 2024.

PredictIt was licensed and available for the entire 2020 election cycle. But on August 2, 2022, the Commodities Futures Trading Commission (CFTC) ordered the PredictIt market to close by February. 15, 2023. That order is under appeal.

Prediction markets based in the United States may well have limited availability in 2024. Fortunately, prediction surveys from The Virtual Tout® provide a substitute for prediction markets.

Go to the home page of The Virtual Tout.