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As an indirect response to this, if you'd like to see impartial predictions for the next election - turn to Vegas [1]. People betting have a financial incentive
by rjf72 7y ago
As an indirect response to this, if you'd like to see impartial predictions for the next election - turn to Vegas [1]. People betting have a financial incentive, not a political one - so it tends to be a great way to avoid potential bias. If you're not familiar with betting terminology something like "+110" (current odds on Trump) means if you bet $100, you will win $110 in profit. By contrast something like -450 (Clinton's odds on the morning of the election in 2016) means you need to bet $450 to win $100 in profit.
So the smaller a number, the more likely it is to happen. Factored into this is going to be a bit of juice. Trump's currently on +110 so Vegas is saying the next election is basically a coin flip. For an example of this revealing things that regular polls might not, it's also showing that Biden is a pretty sizable dog to Warren (+550 vs +375).
You can now use these numbers to see how close your predictions come to what the market is suggesting. So for instance let's imagine you think Trump has a 50% chance of winning. What would be your expected value if you bet $100 on this? It's: 0.5 * -$100 + 0.5 * $110 = $5. So you have expected value there of a 5% gain, so you're slightly more optimistic than Vegas - though once you factor in the juice/vig/'tax' it's about even.
Now let's imagine that you think Biden or Warren stand a 60% chance of winning (30% a piece) with 40% for Trump, and so you put $100 on each of them. We can again work out the math. 0.4 * -$200 + 0.3 * $550 + 0.3 * $375 = $197.5. That means that if your expectation is accurate, you would have an expected value of doubling any wager. So you are going pretty far away from what the market thinks, and if you believe this to be objectively accurate - it'd be a terrific wagering opportunity.
[1] - http://www.lasvegassportsbetting.com/2020-US-Presidential-Election-Las-Vegas-Odds_P14398.html http://www.lasvegassportsbetting.com/2020-US-Presidential-El...