SCOTT DETROW, HOST:
Who is Vice President Harris going to pick as her running mate? It is a question political obsessives are following, and it's also a question a lot of gamblers are tracking and betting on. Millions of dollars are being wagered on whether Harris will pick Pennsylvania Governor Josh Shapiro, Arizona Senator Mark Kelly or someone else. This latest opportunity bet is just one more moment in an election where, according to Bloomberg News, more than $366 million have already been wagered.
Tom Wood is a professor of political science at a school that an already-named vice presidential candidate makes a point to call the Ohio State University. He studies political behavior and is here to break this down. Tom, welcome to the show.
TOM WOOD: Thanks for having me.
DETROW: Before we get into this, can you just quickly explain how this works? Because that, in itself, is really interesting. How similar or different is this to sports betting?
WOOD: It's - from a mathematical perspective, it's identical. And this is how I sort of motivate it for students. You can imagine an individual bettor has financial motivations to set aside their personal feelings about the two particular teams playing and instead to soberly assess the available evidence and make the best bet to protect their own financial circumstance. And people betting on election outcomes are doing the exact same process of information integration.
DETROW: Yeah.
WOOD: It's even pretty similar to the way people trade financial derivatives on Wall Street.
DETROW: But how are these bets taking place? Because this is not technically a legal thing you can do like a sports bet, right?
WOOD: Sure. So there are tiny academic markets in the United States. The University of Iowa had an exchange for academic purposes, and then PredictIt came along and now works with the University of Iowa. But the huge sums of money being bet are being placed on bookmakers abroad - mostly the U.K., Australia, Ireland, where betting on politics is regulated exactly the same way that you could bet on who's going to win an Oscar or who's going to win the Australian Football League...
DETROW: Yeah.
WOOD: ...In that particular year. And so we might be curious as to which kinds of people are participating in these markets.
DETROW: Yeah.
WOOD: It is, of course, illegal for Americans to participate directly in those markets. But I'd invite your listeners to think about the ease with which people can use things like VPNs and a simulated credit card with a foreign billing address. And so it's probably the case that a large number of Americans are participating in these overseas betting markets.
DETROW: Not that we're endorsing that, I will just say...
DETROW: (Inaudible) - right.
DETROW: ...From a legal mind, but...
WOOD: Of course.
DETROW: But yeah, this is this is something that has grown election after election after election. I'm curious, have you taken a look at how accurate the markets typically are compared to the eventual results? Are these things that we should be looking at like we look at polls?
WOOD: So there's a very large literature on the respective accuracy of polling and markets. And they find that markets tend to consistently outperform. So you might imagine that, in addition to reading elite American press and listening to NPR to integrate political news, it's probably also the case that people who bet on these markets have read at least a fair smattering of the academic research on campaign effects, the role of the economy in harming or helping incumbent candidates. So it's really a pretty interesting and efficient way to integrate all those different sources of information to make the best sort of bet on a - from an individual's perspective.
DETROW: The interesting thing about Kamala Harris selecting a vice president is that this is not something that was anticipated until very recently. There is a lightning-fast veepstakes happening over the course of weeks. You've been keeping tabs on the markets. What has stood out to you? What activity have you been seeing?
WOOD: A couple of things. So on the first blush, you'd say that folks participating in this particular market are very shrewd observers of American politics, insofar as the demographic composition of the candidates are doing very well in the veepstakes market. They're all white men. And so they're reflecting this idea that Kamala Harris faces some sort of strategic demographic imperative to balance her role at the top of the ticket with some sort of salve to political moderates. And so Mark Kelly is doing very well - Josh Shapiro, Roy Cooper, Andy Beshear, Pete Buttigieg.
And it's also impressive the extent to which people are paying a ton of attention to the individual movements of the candidate and the rumors. You can see big fluctuations in these market (ph) whenever there's a rumored meeting between the vice president and a prospective candidate. And so - gosh - by the time Kamala Harris has made a choice, we'll have minimal polling data to help us track this choice. So if you are really a political tragic and you want to follow moment by moment, you could do a lot worse than simply refresh your local bookmaker's odds sheet.
DETROW: You know, there was an interesting scandal in the British election where a political adviser who may have had inside information about...
WOOD: Right.
DETROW: ...When the election was going to be called placed a bet on what day the election would be called for and won that bet but triggered an investigation right away. And I think that leads to a question of there's so much money at stake here. Any concern that this could corrupt the process or lead to people making political decisions to win money?
WOOD: So I mean, it's a really interesting question. I think the one thing that probably protects us in this system is just how ideologically motivated American politicians are, the idea that they would act differently to protect, abet, rather than just to maximize their chances of having political influence. I definitely don't think that elected officials themselves are likely playing in these markets. But yeah, I share the - it is a concern. If a staffer - if a person who regards politics as their vocation rather than a battle of ideological opportunities, that person might have an opportunity to to trade information. But that also is what makes these markets so fascinating. There probably is people inadvertently divulging private information, like, on these marketplaces. And so we might think of that as - weirdly, as another way in which these markets have some prognostic accuracy.
DETROW: That's Tom Wood, political science professor at Ohio State University. Thanks so much.
WOOD: Thanks. Transcript provided by NPR, Copyright NPR.
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