Question of the Day - 24 September 2024

[Editor's Note: This answer is written by David McKee, LVA's business blogger.]

If Americans could put wagers on the existence of God, they would. (Not that other cultures have much of a moral high ground in this matter, as we shall see.) Apparently, elections are not too important to bet on as though they were sporting contests, rather than having real-world life-or-death ramifications.

The courts seem to see nothing wrong with overturning decades of precedent by opening the electoral process to the kind of betting you might see on a football game. And if you think there’s too much money swamping the electoral process, wait until the betting markets get a hold of it.

Kalshi, which is a betting firm, not the Hindu goddess of triviality, petitioned a New York court to allow it to take bets on the electoral process. The Commodity Futures Trading Commission is, for perfectly good reasons, dead set against this. Kalshi wants an immediate resolution, pouting that the “Commission lost, fair and square, on the law. It should not be allowed to snatch a procedural victory from the jaws of defeat by running out the clock” until after the next election.

Kalshi claims, with a perfectly straight face, that it's being thwarted from providing a public service. As you stated, the initial bets would be straight up/down ones on who will control the House of Representatives and Senate come November 6. However, does anyone think Kalshi will stop there?

The CFTC says taking such wagers would be contrary to the public interest. Imagine people casting votes because they have money riding on it. It’s hardly what the Founding Fathers envisioned. Says the CFTC, such betting “could potentially be used in ways that would have an adverse effect on the integrity of elections or the perception of integrity of elections — for example, by creating monetary incentives to vote for particular candidates.”

The mainstream gambling industry is staying on the sidelines. That should give you an idea of how dicey this issue is. If Americans were allowed to bet on elections and it took off, though, you could be sure Big Gaming would jump in with both feet. After all, you don’t see any gambling CEOs speaking out against election wagers.

Right now, the issue is at the mercy of the calendar of the D.C. Circuit Court of Appeals, which wants to study the issue for itself. Not that this has stopped Kalshi from taking bets. As of this writing in mid-September, the GOP taking back the Senate is the underdog at +129.

An even bigger win for bettors would be if Democrats took the House, which would pay $154 on a winning wager of $100. You see how seductive this could be, possibly motivating people to vote against their own principles because they had money riding on it? What’s next? Pointspread betting on political races (“Trump by -2”)? Parlay bets on multiple races?

Already the nose of the political-corruption camel has been stuck into the tent by the betting process. The 2012 presidential election, according to the Los Angeles Times, seemed closer than it actually was, because a whale bet large on Sen. Mitt Romney (on illegal betting platforms) in order to create the illusion of a tight contest. And then there were wagers that singer Kid Rock would unseat Sen. Debbie Stabenow. So it can get pretty strange.

As for the contention that betting on elections is A-OK because Great Britain and European countries allow it, that doesn’t withstand the laugh test. The July snap election in Britain was roiled by multiple gambling scandals in which candidates and cabinet members were using inside information to place fraudulent wagers on the date of the plebiscite. Stranger still was the opposition Member of Parliament who bet heavily that he would lose his own seat. Is this really what we want for ourselves?

We should let the CFTC have the last word when it comes to Kalshi’s “sophomoric” argument that regulated electoral betting is superior to black-market wagering. “A pharmacy does not get to dispense cocaine just because it is sold on the black market.”