Cosman: Political betting model congruous with Washington environment

On March 10, the online betting and “prediction market” site Intrade announced that it would “immediately cease trading activity.” The site, which allows users to make bets on various world events including United States presidential elections, had always been a target of questions of legality and the ethical implications of its commodification of world political events.

But in a reality where politics – at least in the U.S. – amounts to little more than sport, Intrade’s demise is merely a deferment of an acceptance of this reality. The loss of Intrade comes as a loss of quantifiable accountability in a political environment dominated by self-selective rhetoric and spectacle.

Intrade’s recent notoriety comes from its use during the 2012 presidential election, when it accurately predicted President Barack Obama’s re-election, never giving Romney more than a 45 percent chance. During an election dominated by pundit forecasts that flip flopped day-to-day and electoral models popularized by New York Times blogger Nate Silver, Intrade remained a stable prediction model.

It was this popularity and consistency that ultimately cost Intrade its operation. Shortly after the election, the U.S. Commodity Futures Trading Commission filed a lawsuit against Intrade, preventing Americans from using its prediction markets. With its U.S. markets shut down, it was only a matter of time for the rest of Intrade to follow suit.

This loss comes as a blow to political rationality and accountability. With the aggregate of so many users betting on the outcome of political events, Intrade was able to provide a stable base on which to stand among the murky and deliberately misleading predictions and claims made by pundits and even politicians themselves. In a study published by the American Association for the Advancement of Science, 19 economists stated that prediction markets like Intrade “produce forecasts of event outcomes with a lower prediction error than conventional forecasting methods.”

In simpler terms, as Washington Post columnist Neil Irwin puts it, Intrade forces pundits and wannabe political forecasters to “put their money where their mouth is.” If someone thinks New Jersey Gov. Chris Christie is a shoe-in for the 2016 Republican presidential nominee, they can pony up and put $100 on the outcome. Intrade moves punditry past the baseless claims used to incite uproar and controversy and into a quantifiable market for political forecasting.

The idea that betting on political outcomes is unethical in that it somehow cheapens or delegitimizes them is absurd. The political landscape has always been made up of individuals and organizations resorting to cheap ploys for media attention and focused only on “winning.”

Touting Intrade as the usher of this political climate falls just short of scapegoating. Intrade simply capitalizes on a system already in place. The thousands of individuals betting on the outcome of political events is a symptom, a logical result. If U.S. politics is going to present itself as mere spectator sport, then its audience will treat it like one.

The end of Intrade won’t be the end of this kind of political betting. Nate Silver himself points out that “billions … will be wagered somewhere else: Wall Street.” So even with Intrade shut down, political observers will still have a financial market in which to quantify their predictions, buying and selling stocks based on the likely winner of an election.

Intrade is the latest casualty in an attempt to hide what political discourse in the U.S. has become: sport. The nonchalance in the way it treats electoral outcomes as little more than a Las Vegas betting line falls in line with the dispassion of our political elite and punditry. With each side only focused on “winning” at all costs, the least we can do is bet on the winner.