PredictIt Bettors Seem Sure 13-Time Loser McCarthy Will Be House Speaker

Written By Steve Friess on January 6, 2023
futures markets kevin mccarthy political exchange

Somewhere during everybody else’s lunch hour on Friday on the East Coast, the members of the 118th United States Congress for the 12th time in four days rejected a bid from Republican Kevin McCarthy to become the Speaker of the House. That reality was clear within the first 20 minutes, after Republican rebel leader Rep. Matt Gaetz of Florida cast the fifth vote against McCarthy, making it mathematically impossible for McCarthy to clear the 218-vote threshold he needed to become third in line for the presidency.

Even so, minute by minute the McCarthy “market” continued to gyrate in, for clever bettors, thrilling ways that mimic the intragame betting of a wild, high-scoring football game. The 12th vote was special because it represented the first time McCarthy’s long negotiations showed any signs of paying off; he went from 21 defectors in polls No. 4 through 11 all the way down to seven in vote No. 12.

As McCarthy’s vote totals have fluctuated, so have the prices associated with shares of his potential future “speakerhood” on PredictIt, a platform that allows people to buy such commodities as if they were tangible goods or part of a company.

kevin mccarthy us house speaker candidacy
PredictIt has live markets on who will become the next Speaker of the US House

Kevin McCarthy rising and falling on PredictIt

Accordingly, the price of buying a share of McCarthy-to-win on PredicIt, which began the day around 54 cents, bounced into the mid-60s at noon ET on reports of a deal with a contingent of rebels and as the vote began and surged into the 70s during that vote.

What happened during the gamevote, however, was a bit more complicated. Every time a previous anti-McCarthyite stood up to flip to his side, the price would pop about 10 cents or so – only to tank by a nickel or more the next time a Never-Kevin holdout held firm and voted no. The actual potential outcome of the vote itself never changed – McCarthy would lose yet again – but if you spotted that pattern, as many braggarts on the PredictIt’s very busy Speaker of the House message board claimed later they had, you could make quite a lot of money in that hour buying and selling and buying shares again over and over.

It was clear that there was a population of people following this who believed that any defection harmed McCarthy’s odds and any movement in his direction meant he had the thing in the bag.

Spoiler alert: As of the publication of this report, he does not have it in the bag. After vote No. 13 – another failure for McCarthy — reduced the anti-McCarthy side to six, the House went into recess until 10 p.m. Presumably, that was to give him time to shore things up; he needs now to flip just two votes to clinch America’s most thankless job.

Could McCarthy futures pay off in the end?

McCarthy left the chamber and told reporters he would get the votes and the betting market clearly believed him. By 4 p.m. ET, it cost 95 cents to buy a share of McCarthy-to-win. Conversely, the cost of betting on Rep. Steve Scalise of Louisiana to win dwindled from 32 cents at noon all the way to a penny as the low winter sun set on Washington, DC. (Scalise, the new Republican House Majority Leader, has said he is not a candidate for the job, but most observers think if McCarthy withdraws, the rebels will accept Scalise as the next alternative.)

“Why so confident he has the votes, when he clearly doesn’t?” someone called CobraDongLarry asked at about 4:15 p.m. on PredictIt’s message board. “Seems worth 9 cents to me.” He was met with scorn, mockery, and misinformation for his eminently reasonable bafflement. One respondent claimed Gaetz himself had said McCarthy probably has the votes, which indeed probably be the put-away shot if true; there was no report of that nature anywhere.

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Candidates for US House Speaker in PredictIt’s political market

This McCarthy mess may turn out to be PredictIt’s big (17 million shares traded as of Friday evening) and unexpected (there hadn’t been a multi-ballot race for Speaker in a century) swan song. The site operates as an academic experiment with the permission of the Commodities Futures Trading Commission, but that permission appears likely to be revoked in mid-February because it’s all become too indistinguishable from a sports book.

There aren’t really any interesting questions left to be definitively answered between now and then in American politics –the 2024 presidential candidates won’t be settled for at least a year – so the Speaker drama could be a finale of sorts.

Perhaps rather than shutting this system down, the CFTC might demand some changes to protect consumers. It is baffling, for instance, that as of Thursday you could buy a share of Jeffries-wins 3 cents. Rep. Hakeem Jeffries of New York is the Democratic leader in the House; there is no universe in which he’d be Speaker with a Republican majority, however slim and dysfunctional. There are many examples of people wagering on outcomes that are simply, practically impossible.

If this is the end of the road for PredictIt, folks who get a charge out of betting on politics better indulge on this spectacle. It certainly makes watching C-SPAN a great deal more fun.

Photo by AP Photo/Jose Luis Magana
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Steve Friess

Steve Friess is the national gambling industry correspondent for PlayUSA and its related local sites. He is also a contributing writer for Newsweek. A Long Island native who earned a journalism degree at Northwestern University, Friess worked at newspapers in Rockford, Illinois, Las Vegas, and South Florida before launching a freelance career in Beijing, China, where he served as chief China correspondent for USA Today. After his return to the U.S. in 2003, he settled in Las Vegas, where he covered the gambling industry and the American Southwest regularly for The New York Times, Playboy, The New Republic, Time, Portfolio, BusinessWeek, Newsweek, New York magazine, and many others. During that time, he created and co-hosted two successful and groundbreaking podcasts, the celebrity-interview show The Strip and the animal affairs program The Petcast. In 2011-12, Friess was a Knight-Wallace Fellow for at the University of Michigan. That was followed by a stint as a senior writer covering the intersection of technology and politics at Politico in Washington, D.C., In 2013, he returned permanently to Ann Arbor, where he now lives with his husband, son, daughter and three Pomeranians. He tweets at @SteveFriess and can be reached at [email protected]

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