Political Futures
Categories: Derivatives
Want to bet on who will win the next election? We mean really bet. Let’s do it. The legal way. And yeah, there is one.
Contracts that bet...er, speculate...on the outcome of political events are called political futures. If you bet on the underdog who wins, you could make a solid buck. With higher risk comes higher potential payoffs.
Gambling on U.S. elections isn’t allowed, but political futures are. You can even bet in cash, but only at the Iowa Electronic Markets, operated by the University of Iowa. It’s for research, they say. The Commodity Futures Trading Commission said, "Sure thing."
What kind of research? Oftentimes, large groups of people can be smarter at problem-solving collectively rather than individually. This is called the Wisdom of Crowds. Research into political futures can see if the Wisdom of Crowds applies here.
If you want to look beyond U.S. borders for political futures, there are other jurisdictions out there with more relaxed rules. PredictIt (operated by a uni in Australia) and Augur (open source, decentralized) are both prediction market options. Augur specifically cuts out the middlemen, but...it’s not regulated anywhere. Good thing? Maybe. Bad thing? Maybe. That’s for you and your dollars to decide.
