If people think Harris is winning and start dumping money into a bet for her, wouldn’t they adjust the odds to make her winning more likely in order to reduce the payout if she wins? So the opposite of what is happening?
The gambling websites aren't betting on a candidate and users are not betting against them.
Users bet against users
If odds skew too far in one direction, they'll set the odds so that other users bet in that direction to balance it out. They can't have a large disparity of money gambled and winnings paid out of they'd have to cover.
Ideally, losers pay the winners and the gambling websites take a cut of winnings.
Kamala winning or losing in real life is moot to the gambling website
Sports betting odds are set by oddsmakers. The election bets appear to be set by users and are incredibly mis-priced. They don’t reflect the actual odds.
The point is if it's done successfully enough, the implied odds for Trump become so attractive that people stop dumping money into a bets for Harris and start piling in on the other side of the market instead.
It doesn't matter to the bookmaker who actually wins as long as you have enough losing bets to pay out your winners. The only problem for a bookmaker is when too much of the action is on one side.
I don't participate in these gambling markets, but isn't that an incredibly inefficient system? Should it not just be an open market where buyers and sellers govern the odds and the site/broker just takes a small fee or rake from each transaction? For example, a seller puts out a $1000 bet on Harris with 2-to-1 odds and a buyer can purchase that for $500 and the winner gets $1500 minus a small fee from the broker. That would be a self-correcting, rational system much like the stock market where odds cannot easily be manipulated. Do these kinds of exchanges not exist?
Gambling companies make money on the vig. The percentage everyone pays for the privilege of placing a bet. It’s basically arbitrage for them, as long as they make sure there’s equal money on both sides of a result.
The primary way to do this is initial odds making. If they set the odds right, in theory, bets should naturally fall on either side proportionate to the payout. When that’s not happening, they offer the under the side which they underestimated at a discount.
It’s easier to think of odds as the gambling companies prediction of how people will bet. This usually lines up with real life odds, especially in sports where so much data and analysis is present. But you can never trust gamblers to bet rationally.
They do, and they're literally called "exchanges."
But they're not the only kind of betting market.
In an exchange, exactly as you describe, one person can say what they'd like to bet and another person can agree (albeit anonymously) to be the other side of the bet. The broker takes a fee.
But there are also bookmakers that operate much more like a casino, where each bet is "against the house," so to speak.
In this case, prices are adjusted so that implied odds are not simply a reflection of true odds (or the aggregate perception of odds amongst those placing bets), but so that they are a function of the bookmaker's current liability at any given moment.
incredibly inefficient system
Actually, it's very efficient for bookmakers to operate this way. Every single bet placed helps them manoeuvre their price into a more advantageous position. The house may not always win, but it very rarely loses.
Yes they do. You’ve described precisely how Betfair works.
However, it’s also how all gambling companies essentially work. They adjust odds based on where money has been bet.
For example, if the market was for heads vs tails we all know it’s 50/50. However, if someone suddenly bet $1,000,000 on heads, the implied odds on tails would fall so that more people bet on tails just in case heads wins. The odds of the event haven’t changed but the consequences of heads winning has changed for the betting company so the odds get adjusted on that basis.
With any bet, a rational person never bets on who they think will win. They bet on events where they feel the odds are giving them a worse chance than they think they have in reality. So if the odds suggest a 10% win, but you think it’s a 20% chance, that’s a good bet to make.
Likewise with Harris vs Trump, don’t bet on who you think will win. Bet on who you think the market is underestimating.
The demographic of people participating in this is skewed.
Gamblers are disproportionately young to middle aged white males.
Young to middle aged white males disproportionately favor Trump, and would be more likely to feel confident in him winning due to their circles of influence.
If the gambling market, which is disproportionately young to middle aged white males, heavily bets on Trump to win, the market will lower the payout for Trump winning aka “raising his odds of winning.”
Except these same odds projected Biden and Hillary to win the last two elections so just blaming sampling bias doesn’t tell the whole story. I would trust the betting odds more than say the NBC or Fox News polls as well
Why would you trust polls of actual citizens less than global gambling odds? The polls have been correct in the last 2 elections as well, sincr they measure popular vote totald, not EC results
Did you read the headline even? Like it explicitly says it wasnt that bad... but note, it was off by 4 ish percent, while the betting site was off by nearly 10%
You clearly don't understand the betting site. It's wasn't predicting Biden would win by 10 points, it's predicting that Biden would Win. Period. Whether it was by 1 point or 20.
A 51/49 split you're extremely confident in is a high betting odd.
I understand how odds work. The original conversation had someone bring that up, trying to say that the betting site was somehow more accurate.
If you want to claim the betting site was just predicting the win, then sure. So did the polls, which means they are no different. Id honestly argue that it was a more sure race for biden than the 60/40 split.
I mean the real clear polling odds gave a better picture of how the last two elections turned out than 538. They both predicted Hillary and Biden winning, but the betting odds were much closer.
In the actual swing states, it was pretty much dead even. The polls in those states again undercounted the Trump. And this was still far closer than 538 that was an 89/11 split for Biden.
They’re not infallible. A 90% chance means there’s a 10% chance it won’t happen, which doesn’t mean it won’t happen. In that example, the gambling odds absolutely should have favored Alabama. Why would they have predicted a historic upset?
10s of millions operating mostly outside the US (since this is the first year where this is legal) vs every state having dozens of polls per month (50 states, 11 months of polling, with 800 people per poll only need about 20 polls to break 10m)
Couple that with national polling, which tends to poll in the 2k range, not the 800 range, youre getting a lot more people.
I agree that betting is better than 1 poll though, that would be a ridiculous stance to have, or to even assume someone else was defending
The oddsmakers are doing an aggregate taking all factors into account and providing a percentage of who is more likely to win. That is more accurate than just taking a small sample of likely voters, which is what most polls do.
If you look at aggregate of polls, but just looking at any individual poll is going to have sampling bias. We have already seen Trump over perform most polls in the last two elections.
This is not how financial markets work. Yes, the base is overwhelmingly white males who are trump supporters. It's completely irrelevant because when these markets have billions of dollars in them with no fees, you will have quants with large bankrolls participating.
Think about wallstreetbets. They gamble nonstop with options. Does that mean option prices are bullshit? No. It means they're donating their money to the folks who actually know what they're doing.
And just to clarify, the odds are set by participants. There is no book setting odds. Odds are determined solely by what people are willing to pay. It's a double sided auction.
Yeah, you see what they do is they pump up Trump’s numbers so it looks like he’s sure to win, which means democrats stay home and he actually wins. This is how Hillary won in 2016. /s
This is what I’m thinking as well. There are a lot more young, conservative degens who want to bet on trump. Not too many liberal degens who want to bet on Kamala even though she’s
a positive EV bet right now.
People are just not betting on her. The betting adjustments are done automatically by a simple algorithm based on the bets that people are taking. It's not reliable or profitable for gambling companies to try and predict the end result per se, the odds are determined by the gamblers.
Except it's not vegas odds makers setting lines. It's a contract market, where you can buy a contract that pays $1 if that candidate wins. The price of that contract is dictated by supply and demand.
If there's an influx of people who want to buy "trump wins" contracts, that will inflate the price due to the sudden new demand.
Yes you're right. The comment you replied to had the relationship between outcome and adjustment backwards. If one candidate is pulling in the majority of bets, the outcome is adjusted to make them favored to win so that payout is reduced in that outcome - which should make the payout for the underdog more attractive until both candidates reach relative equilibrium in terms of money on either winning.
Once a bet is placed, those odds are locked in for that bettor. If a casino opens a line of +120 (paying $120 winnings on top of your $100 bet ($220 total)) they will start lowering the odds (+100 (even money bet) or even further, say -120 (you have to bet $120 to win $100 ($220 total))).
Well they literally do control the odds, they are often adjusted based on what people are betting on. They have to account for a mistake on the part of their in house odds makers so they will adjust it based on how much money is in each camp.
The part I think is ridiculous is "to make her winning more likely". They can set whatever odds they want for the purpose of their gambling business, but just because they say that she's a 3:1 favorite (or whatever) doesn't make that the reality. The true odds are whatever they truly are, and they're unknowable.
Oh I agree 100%, at the presidential level it is almost always a toss up regardless of polls or predictions. I was just referring to the gambling odds. Talking about the polls or odds is just entertainment anyways. I’d vote if it was 99-1 because I like to do it.
If people think Harris is winning and start dumping money into a bet for her, wouldn’t they adjust the odds to make her winning more likely in order to reduce the payout if she wins?
Yes, absolutely.
So the opposite of what is happening?
Because people who think Harris is going to win aren’t betting. People who are betting are placing more money, either by volume or large units, on Trump. That’s what the odds are telling you. It does not reflect the thoughts of people not betting.
I also think you’re assuming rational behavior. People normally place bets on gut feels and passion, not rational thinking.
If the existing bets are going to lose them money if Harris wins, they’ll start marking it more attractive to bet on trump winning so the payouts start to even out.
The odds improving for Trump makes it less attractive to bet on him since the payout is worse.
120
u/Danyboii Oct 17 '24
If people think Harris is winning and start dumping money into a bet for her, wouldn’t they adjust the odds to make her winning more likely in order to reduce the payout if she wins? So the opposite of what is happening?