State of Play is a column that focuses on the trending stories in the casino and gambling space with sharp and clever insight from senior staff writer Steve Friess. Over his 25-year career, Friess has contributed to publications such as Newsweek, Time, New York Times and more.
In a little-noticed remark buried in a lengthy interview with the Bloomberg podcast “Odd Lots,” the chairman of the Commodity Futures Trading Commission (CFTC) laid out the reason why he and his colleagues are fighting tooth-and-nail against allowing gambling on politics in America.
Rostin Benham’s agency has been in lengthy litigation with PredictIt, a New Zealand-based site that for several years enjoyed a de facto permission to take money for a wide range of U.S. election outcomes under something known as a “no-action letter.” The CFTC promised to leave them alone unless they strayed from their original mission as a live-action tool for academics watching the action as a long-running research experiment and started smelling a bit too much like a casino sportsbook.
Long story short, the CFTC tried to shut down PredictIt earlier this year. The site sued. Courts have repeatedly sided with PredictIt that the action by the CFTC was arbitrary and capricious in part because the CFTC never explained why it was reversing itself. The matter remains unresolved.
In the Bloomberg interview, flagged by the hosts of the Star-Spangled Gamblers podcast, Benham gave this reply when asked why the regulatory agency was so queasy about PredictIt, an upstart competitor named Kalshi and any other form of betting on elections:
“Imagine a situation where we have alleged fraud or alleged manipulation of an election, and someone coming to the CFTC and say, you know, you have a contract listed on an election in X district in Y state. And we believe there was fraud because of hardware, software, news, you name it, right? You need to police that fraud. What I’m trying to say is, the CFTC could end up being an election cop. And I don’t think that’s what Congress meant or intended for us to do.”
On its face, this sounds reasonable. We do live, after all, in a world in which delusional sore losers encourage and incite mobs to block the peaceful transfer of power and file dozens of failed lawsuits to challenge its outcome.
Bookmakers deal with these situations all of the time
Benham is entirely correct that the outcome of future elections will be disputed.
Yet he is incorrect that it could ever become his problem — and the idea that this is his main reason not to do it reflects an alarming ignorance. As Adrian Smith, an election compliance officer in the U.K. who is also an expert on political gambling markets, tells me:
“There’s a lack of expertise there because if you look at it from the perspective of a bookmakers, they deal with this kind of situation all the time where there may be certain conditions that they have to lay down about how a bet will be settled.”
Indeed, Benham need only look to the fact that the CFTC did not play the role of “election cop” in the 2020 election. It was no secret that then-President Donald Trump was going to allege fraud; he did so for months before the election took place and did so as well about various aspects of the 2016 election that he won.
Bookmakers anticipated this and acted accordingly, Smith says:
“They simply had to amend the terms and conditions for those markets to say ‘we will settle the market on this basis and, obviously, if you don’t agree with that, don’t place a bet. It’s very simply managed. Bookmakers deal with this all the time. It’s no different to them having a policy for a Stewards enquiry in horse racing. As long as those terms and conditions are fine, there’s no problem.”
A nonsensical policy around political gambling
This is not the only case of unawareness and bias about the gambling world resulting in nonsensical policy around political gambling.
The reason the idea makes people queasy is because of fears that “bookies” and “gamblers,” those immoral denizens of the underworld, will somehow commandeer or manipulate the results or perceptions.
A campaign manager, for instance, might bet against his own candidate and deliberately tank that candidate’s chances because he’s a gambling addict who got in too deep. Or a wealthy longshot candidate might spend big to back himself in the betting markets to create the perception that momentum is on his side and, thus, forces the media to take his campaign more seriously.
Yet in the many years Britain has allowed gambling on elections, these scary scenarios have never come to pass. In the U.K., they don’t even play the coy game of pretending a bet for Boris Johnson is an “investment” in the “market” for Boris Johnson, which is how PredictIt operates. Britain just calls it what it is — gambling — and it appears in online sportsbooks in the same formats as the lines for sports. Says Smith:
“To my knowledge, no one has successfully changed the narrative or outcome of an election or really changed even one iota of public perception as a result of betting action, whether deliberately or by accident. Any worries about the kind of sanctity of elections being violated by people who are trying to manipulate a betting market are generally quite misplaced. And the market itself, as it’s grown bigger and bigger and bigger, is harder to manipulate, the bigger it gets. If you did want to manipulate a betting market, you’d have to be betting in in enormous size.”
Any wild swings like those suggested by the worst-case scenarios would likely be detected because the markets are so transparent and professional, Smith says.
No state or jurisdiction in the U.S. allows political betting.
Schemes could be detected easily
The reasons for opposing political gambling are reminiscent of the reasons the NFL doesn’t let players bet on NFL games. There’s a belief — Superstition? Fantasy? Delusion? — that the outcome of a professional football game could be decisively influenced by any individual or even a few people. Elections are the same. They are complex enterprises involving hundreds, thousands or even millions of people.
It’s not that people won’t try to thwart them in illegal ways. Or even that they won’t try to do so for a profit.
But the odds are poor that such a complicated scheme involving so many people taking such grave risks could go undetected.
Betting lines, in fact, might just be the panacea to detect and prevent such interference and conspiracy. Giving that many people have vested interests in ferreting out problems could be the solution, not the cause, of malfeasance.
That notion probably would shock someone like Benham. Too bad someone who knows so little about gambling and elections gets to decide the relationship between the two.
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