If the self-described Stock Market for Politics is correct, today’s presidential election will remain “too close to call” when East Coast clocks strike midnight.
PredictIt traders think CNN and Fox News will wait until at least Wednesday to declare a winner.
Whenever the race is called, they envision a narrow victory for Democratic presidential nominee Joe Biden. A correct 63-cent wager on the former vice president pays $1.
PredictIt’s head of public engagement, Little Rock native Will Jennings, says the pace of trading has accelerated with an election looming.
“In terms of growth for the company and everything, this is the busiest we’ve ever been,” he said. “Every day, now, is a high volume day.”
Since its launch in Oct. 2014, nearly 1.5 billion shares have been traded on PredictIt, Jennings said.
That includes more than 115 million trades on the 2020 Presidential Winner Market.
These are, essentially, penny trades.
Traders purchase either “Yes” shares or “No” shares at a price somewhere between 1 cent and 99 cents. If they win, they receive $1 per share, minus fees. If they lose, they receive nothing.
On Election Day 2016, PredictIt processed 27 million trades. That figure will likely be surpassed today.
“We anticipate Election Day 2020 will be the biggest single trading day we’ve ever had,” he said.
The number of traders with active accounts is currently around 110,000, Jennings said.
Participants can put money on the overall outcome or they can trade shares on individual states. They can stake money on the popular vote, the electoral vote or the state with the smallest margin of victory.
There were 214 separate markets listed on the organization’s website Monday night, ranging from the winner of the Arkansas U.S. senate race to potential U.S. withdrawal from NATO.
Since he works there, Jennings isn’t allowed to make trades himself.
PredictIt isn’t the first outfit that has tried to monetize election predictions. Intrade, a previous online prediction exchange, was sued by the Commodity Futures Trading Commission shortly after the 2012 presidential election.
The agency alleged the unregulated trading was illegal.
The Ireland-based business closed shop soon thereafter.
Rather than risking the Commodity Futures Trading Commission’s wrath, PredictIt has worked within the system.
Teaming with Victoria University of Wellington, New Zealand, PredictIt’s founder sought and was given permission to proceed with a “small-scale, not-for-profit, online market” that would be operated “for educational purposes.”
Visitors to PredictIt’s website are warned the predictions market is “unregulated, experimental, and being operated for academic purposes.”
Investors can risk up to $850 on a single contract.
Traders pay a 10% fee on any profits; they pay an additional 5% fee to withdraw their funds.
With each market, PredictIt lays out the ground rules ahead of time, attempting to anticipate particular problems that could arise.
“Every one of these are legally binding contracts,” Jennings said. “We go to painstaking efforts to make sure that there is no ambiguity in our rules because there are a lot of lawyers that use this tool and we will hear from them if we have done something wrong.”
If all goes as planned, Jennings will soon be an attorney himself.
The one-time White House staffer and aide to former U.S. Rep. Marion Berry, D-Ark., is currently a third-year law student at the Indiana University Robert H. McKinney School of Law.