GAMBLING on elections is an invitation for corruption, say two independent MPs who want it banned ahead of the September 14 poll.
Senator Nick Xenophon will introduce legislation to ban gambling on the outcome of state or federal elections, after one betting agency took out a full-page advertisement to promote its markets for this year’s vote.
Sigh.
Does Xenophon really think that a political party will throw an election to win a bet? I’m happy to believe that a sportsman or sports team might do that – after all they play every week or so. But an election that happens every three or four years with the spoils of public office up for stake? No, I don’t think so. But wowsers never apply logic to their thinking – like all puritans they have the nagging suspicion that somebody, somewhere is enjoying themselves.
Prediction markets are very handy things. Back when he had a real job Andrew Leigh did a lot of serious work looking at how they operate. So I’ll let him do the talking:
One way to get a better sense of the future is to turn to prediction markets, which have proven surprisingly accurate in forecasting election results. Such markets aggregate information from a large number of individuals, weighting it in proportion to each person’s degree of certainty about the outcome. Ask experts what they think will happen, and you’ll discover that talk can be pretty cheap. But ask those experts how much money they’d wager that the predicted event will come to pass, and you’ll find out how confident they really are.
Over the past decade, a wealth of evidence has accumulated on the power of prediction markets. In the words of George Mason University’s Robin Hanson: ‘in every known head to head field comparison between speculative markets and other social institutions that forecast, the markets have been no less, and usually more, accurate. Orange Juice futures improve National Weather Service forecasts, horse race markets beat horse race experts, Oscar markets beat columnist forecasts, gas demand markets beat gas demand experts’. And many firms – including General Electric, Google, Hewlett Packard, Nokia and Pfizer – have established internal prediction markets to shape their decision-making.
…
Prediction markets are not perfect, but many of the early critiques turn out to have been overblown. Trading volumes are generally thick enough to provide good estimates, and arbitrage opportunities are rare. Market manipulation is difficult, and prices generally revert to their true value as smart money happily soaks up ideological wagers. Structural details – such as whether the markets are run as betting markets or futures exchanges – do not seem to matter much.At risk of undermining my own status, the strongest argument for prediction markets is the abysmal record of expert commentators in forecasting the future. One study that followed up the forecasts of several hundred political and economic pundits concluded that their forecasts were about as accurate as would have been produced by a team of dart-throwing monkeys. Armed with grand theories, experts are often too slow to adapt their ideas to fit the facts.
Allowing betting on future events will create greater competition in the forecasting market, and increase the precision with which we can anticipate coming events. In a volatile world, a little more certainty about the future has substantial value. Time for policymakers to take a bet on prediction markets?
So rather than banning them prediction markets should be encouraged. So what is the problem?
Part of the problem is regulatory – gambling laws treat a bet on an important event the same way they treat a bet on two flies crawling up a wall. This ignores the fact that there is a public benefit to improving our knowledge about future macroeconomic and disease events. Governments should lightly regulate – if not subsidise – prediction markets.
Well – I wouldn’t be subsidising them, but removing barriers to entry would be a good start.
I’m not an outright punter, but I do take an interest in where intelligent money (and my own) is going, which is why I keep a watch on things like the sharemarket and 2-horse races like this.
Is Xenophon really saying intelligent money shouldn’t be allowed to place itself on the outcome of an election?
I’d rather win $1.23 on a favourite than lose $3.50 on a nag.
I won’t bother placing a bet, but the fact someone like Xenophon thinks he can intervene in a choice like that puts him in the same class as the fringe-muddled Roxon.
mareeS
31 Jan 13 at 6:01 pm
The betting markets should put up a special on whether the legislation will get up.
Steve X
31 Jan 13 at 6:31 pm
Gambling on elections an invitation for corruption? I get the impression that corrupt conduct in Australian politics seldom waits for an invitation.
Leo G
31 Jan 13 at 7:07 pm
I’m not a betting man, but I have two words for Xenophon.
“Fuck Off”
duncanm
31 Jan 13 at 7:30 pm
We don’t need legal betting to have a bet you sawn off brown nosed fucktard.
You can take me fags and me drink but ya got fuck all chance a stoppin me have a bet.
Infidel Tiger
31 Jan 13 at 7:33 pm
It’s un-Australian to let a day pass without calling for the banning of something.
H B Bear
31 Jan 13 at 8:21 pm
I call for an immediate ban on banning. Banning is dangerous to children and pets and may cause cancer.
wreckage
31 Jan 13 at 10:35 pm
It’s already law in SA : I tried to put a bet on Centrebet for the Last US presidential election and it was refused : when queried, Centrebet said it was SA law
Flyingduk
1 Feb 13 at 4:28 am
Is the presence of this gambling market not an invitation to sophisticated crooks, and malcontents to corrupt the electoral procedure? Say an agrieved ex-partner wants revenge, and releases phone recordings/pictures on Utube showing politician yelling, abusing, drugs, sex, fighting with spouse, kicking the dog, calling voters idiots, drunk, etc-whatever it takes. Say this pollie sits on 54% 2PP, and with odds of winning 5 to 1. Now there is a big financial incentive to essentially manufacture evidence, to make some big money on a betting market.
You can think up your own scenario, but with todays technical ability to manufacture, record and edit highly prejudicial material, and publish it overseas AND make a personal profit, I think there is a hazard to the fairness of an election. There may simply be too many people with an interest in fixing elections
garry
1 Feb 13 at 8:06 am
Say this pollie sits on 54% 2PP, and with odds of winning 5 to 1.
There’s your problem right there garry. No bookie is going to frame a market with such gift odds for such a close race. Polling has a margin of error ranging from 2-4%, so the bookmaker’s market would be much tighter.
Given that overseas bookmaker Paddy Power is offering only 4 to 1 odds on Julian Assange winning a senate seat, to posit a scenario with such generous odds is unrealistic.
It is a truism that hard cases makes for bad laws, and so it is here, using an unlikely extreme scenario to justify a repressive regulation.
Cold-Hands
1 Feb 13 at 7:09 pm