Speaker 1: Pushkin. Welcome back to Risky Business, our show about making
Speaker 1: better decisions. I'm Maria Kanakova and.
Speaker 2: I'm Nate Silver. Today we're going to be talking, as
Speaker 2: you might expect, more about the elections. There's been a
Speaker 2: lot of frankly dark and disturbing news. There's also been
Speaker 2: a lot of polling since the debate. We'll tell you
Speaker 2: more about what it says and where our forecast is.
Speaker 1: We'll also talk about Calshi and prediction markets and betting
Speaker 1: on political outcomes in the United States. There's been some
Speaker 1: big news on that last week. And finally, we're going
Speaker 1: to take it to a more personal place and talk
Speaker 1: about the saga that I've been having with air conditioning
Speaker 1: in the midst of a New York City summer. Let's
Speaker 1: start off with the election models. Trump's assassination, the debates.
Speaker 1: All of this stuff has happened since we last spoke.
Speaker 1: I mean, the debates happened the day before we last spoke,
Speaker 1: but none of that data had been incorporated into the models.
Speaker 1: There were no quality polls out. What has changed. Have
Speaker 1: we seen quality polls in the last week. Where do
Speaker 1: the data stand now? How have your election model predictions shifted.
Speaker 2: Are you implying that data is plural.
Speaker 1: Maria, data are plural name?
Speaker 2: Oh my god, this is It's been a great run.
Speaker 2: Thank you for listening to risky business. But we have
Speaker 2: irreconcilable differences.
Speaker 1: And Michelle is singular name.
Speaker 2: God. Look, before the debate, Harris was ahead in national
Speaker 2: polls by about two percentage points, and now she appears
Speaker 2: to be ahead by roughly three percentage points. And there
Speaker 2: has been quite a bit of high quality data at
Speaker 2: the national level. Why is it number important? Well, the
Speaker 2: electoral college bias, according to our forecast, Silver Bolton forecast
Speaker 2: favors Trump by about two and a half points, so
Speaker 2: kind of the point spread, as if Harris wins the
Speaker 2: popular vote by two and a half points or more,
Speaker 2: she's a favorite in electoral college. If she wins by
Speaker 2: less than two and a half points, she probably doesn't
Speaker 2: get over the finish line in states like Pennsylvania. So
Speaker 2: therefore this is a good development for her. There's other
Speaker 2: stuff too. The question is how sustainable is this if
Speaker 2: you get like a short term bounce, So maybe the
Speaker 2: news cycle already moves on to things like this other
Speaker 2: attempt on Trump's life or conspiracy theories about what Haitian
Speaker 2: immigrants are doing. Then we'll see. But in contrast to
Speaker 2: this kind of labor day period where she was getting
Speaker 2: a lot of mediocre data, like from the New York Times,
Speaker 2: this is now back on track for basically a toss
Speaker 2: of election.
Speaker 1: Well that's good news, I mean.
Speaker 2: If you're if you're a Harris fan.
Speaker 1: If as people know I am, it's good news for Harris.
Speaker 1: But where are we in terms of the poll cycle? Right?
Speaker 1: Do you expect that this is kind of that the
Speaker 1: highest quality polls have already come out, or do you
Speaker 1: expect that we're going to be updating this significantly in
Speaker 1: the coming week or two.
Speaker 2: Now, what happens after a big event typically is the
Speaker 2: national polls go first. If you're going to conduct one
Speaker 2: pole and you do a national poll first, and we're
Speaker 2: kind of well, we're waiting over the next week or
Speaker 2: two to populate infill with with some of the higher
Speaker 2: quality state polling data. Look, earlier this month, Harris was
Speaker 2: getting some pretty mediocre numbers in state polls. You know
Speaker 2: she got for example, Suffolk is a good pole. Souf
Speaker 2: University had her up three in Pennsylvania, but a lot
Speaker 2: more polls have had Pennsylvania, Michigan and whatnot basically a
Speaker 2: tie recently. So so we'll see, you know, if if
Speaker 2: those state polls also improved for her by a point
Speaker 2: or two, that we might be at a point where
Speaker 2: where you would say the race leans slightly toward her.
Speaker 2: If they don't emote, might go back to saying that
Speaker 2: race leans slightly toward Trump. I know it's frustrating. I
Speaker 2: wish I could like have a crystal ball here and
Speaker 2: predict what they would say. But that electoral college gap
Speaker 2: is like, I think it's counterintuitive for people if you're
Speaker 2: used to seeing headlines saying Harris ahead, Harris ahead, tye,
Speaker 2: Harris ahead, lots of reporting the national polls again, Biden
Speaker 2: won the popular vote by four and a half points
Speaker 2: in twenty twenty and just barely won the electoral college
Speaker 2: by by you know, a point or so in Wisconsin.
Speaker 2: Hillary Clinton won the popular vote by two point one
Speaker 2: points in twenty sixteen and lost the electoral college plust
Speaker 2: all these mid Western states, for example, So you can't
Speaker 2: look at these national polls and feel too complacent if
Speaker 2: you're if you're a Democrat, and.
Speaker 1: Are we still looking at Pennsylvania as kind of this
Speaker 1: this benchmark, because you have written about the Pennsylvania polls
Speaker 1: in the last few days, so I'm kind of curious
Speaker 1: to see where we stand there. You just briefly mentioned it,
Speaker 1: but I'd love to kind of go into a little
Speaker 1: bit more detail because you've also you've also had some
Speaker 1: of those paths to victory that might not seem intuitive,
Speaker 1: Like you had one post called Alaska Alasco lastar Alaska,
Speaker 1: which I thought was quite funny. But can you elaborate
Speaker 1: a little bit and can we talk about kind of
Speaker 1: the first Pennsylvania and then what different paths to victory
Speaker 1: might look like if we don't, you know, if we
Speaker 1: stay within this margin and don't see Harris improving.
Speaker 2: Yeah, so Pennsylvania is the most likely what we call
Speaker 2: tipping point state. The tipping point state. The short version
Speaker 2: is it's a state that gives you the two hundred
Speaker 2: and seventieth electoral vote. That's the state that's the number
Speaker 2: that guarantees you a victory in electoral college. A longer version,
Speaker 2: if you line up all the states from most blue
Speaker 2: to most red and add up the electoral votes, that's
Speaker 2: where you get over the finish line. But basically it's
Speaker 2: the decisive state about a third of the time in
Speaker 2: our model, but it's not alone. In that department. There's
Speaker 2: about a thirty percent chance that Pennsylvania is a tipping
Speaker 2: point state, which means there's a seventy percent chance that
Speaker 2: it isn't Harris unlike Biden. I mean, Biden kind of
Speaker 2: had to win Pennsylvania, Wisconsin, Michigan very narrow path, whereas
Speaker 2: Harris has often begetting their numbers in Georgia. For example,
Speaker 2: North Carolina is a state that comes up quite a bit.
Speaker 2: Those states both have sixteen electoral votes, Pennsylvania has nineteen,
Speaker 2: so you can't quite substitute one for the other. But
Speaker 2: there are combinations that work North Carolina plus Nevada, or
Speaker 2: North Carolina plus Arizona, Nevada Nevada, or if you want
Speaker 2: to get really creative, Nevada plus Arizona plus Alaska, where
Speaker 2: a poll came out this weekend showing Harris down by
Speaker 2: only four points.
Speaker 1: When is the last time a Democrat has taken Alaska nineteen.
Speaker 2: Sixty four, LBJ. I believe one Alaska people actually thought
Speaker 2: when Alaska and Hawaii enter the country the Union, that
Speaker 2: Alaska would be democratic and Hawaii would be Republican and
Speaker 2: the reverse has been true instead fascinating, but Alaska has
Speaker 2: a Democrat representative named Mary Peltola who is a lone
Speaker 2: US House or presentative for the state at the state
Speaker 2: legislature level. It's kind of by partisan. It's population is
Speaker 2: changing a lot about you know, four percent of the
Speaker 2: population moves into Alaska every year. It's a transient workforce.
Speaker 2: I don't know if you're getting the expats from California
Speaker 2: and stuff like that. So Harris does have more paths,
Speaker 2: but there's not any one safe path. Let's also remember,
Speaker 2: by the way, I don't mean to scare our Democratic listeners.
Speaker 2: Let's also remember that in these Midwestern swing states Pennsylvania, Wisconsin, Michigan,
Speaker 2: those are states where Poles have overrated Democrats in the
Speaker 2: past couple of elections. So how safe should you feel
Speaker 2: if you're ahead by one point in Wisconsin when Biden
Speaker 2: was up by seven points in Wisconsin and only one
Speaker 2: by one point, for example, Maybe not that's safe.
Speaker 1: Yeah, no, I think that's a very fair point. So
Speaker 1: it is though it is a movement from last week,
Speaker 1: but again there is still a long way to go. Now,
Speaker 1: what about the Trump assassination attempt. Are we seeing any
Speaker 1: effects from that? Will we see effects from that? Because
Speaker 1: obviously that happened over the weekend, and you know, we're
Speaker 1: recording this on Tuesday, September seventeenth, so it's not like
Speaker 1: polls come out, you know, every single day that incorporate
Speaker 1: new events. But I'm curious whether there have been any
Speaker 1: shifts and whether you expect any shifts or not.
Speaker 2: I don't know. I mean we should also so clearly,
Speaker 2: the assassination attempt in Butler, Pennsylvania was a very serious
Speaker 2: incident where Trump was injured and could have been killed
Speaker 2: if he didn't read at the right point in time,
Speaker 2: and another people person and was killed and other people
Speaker 2: were injured. And it's somewhat more common to see plots foiled.
Speaker 2: This guy got further than a lot of people. It
Speaker 2: was a guy at a golf course hiding in the bushes.
Speaker 2: For some reason, he decided to wear a pink shirt,
Speaker 2: which is not known as a color that helps you camouflage.
Speaker 1: Very well, yes, it's not traditional camouflage, that's true.
Speaker 2: So you know, I don't know whether this gets kind
Speaker 2: of talked about or thought. It was an event that
Speaker 2: totally disrupts the news cycle in prediction markets we talked
Speaker 2: about in a moment, it did not particularly move the
Speaker 2: numbers for what it's worth. I mean, look, it just
Speaker 2: I don't know. I mean, this election's turned pretty dark,
Speaker 2: I think, needless to say, right. I mean, you know,
Speaker 2: there probably should be more investigation into the Secret Service
Speaker 2: and what they are or are not doing. I don't know,
Speaker 2: that's not a bigger topic. For example, you have you know,
Speaker 2: Elon Musk making this awful joke about why hasn't anyone
Speaker 2: tried to assas the Democrats? That was low even for Elon,
Speaker 2: Even for Elon. I mean, you also have on the
Speaker 2: on this Haitian immigrant story. Some of this stuff is
Speaker 2: pretty outright racist, I think. And you also have like
Speaker 2: JD Events saying well, maybe it's not I'm paraphrasing slightly,
Speaker 2: maybe it's not strictly true, but at least it's a
Speaker 2: way to get people talking about immigration more. I mean, you're,
Speaker 2: first of all, you're not supposed to say that part
Speaker 2: JD Events, right, You're you're saying the quiet part out loud,
Speaker 2: and I and it's just so bizarre and and weird.
Speaker 2: I don't know, Maria, there comes a time when and
Speaker 2: this is after a period when after she took over,
Speaker 2: after Biden was shoved out of the way. He didn't
Speaker 2: honorably step aside. He was shoved out of the way
Speaker 2: by Nancy Pelosi and people who are smart and want
Speaker 2: to win the Democratic Party. You know, Harris ran this
Speaker 2: kind of sunnier, happier campaign and and I know sometimes
Speaker 2: after Labor Day things just turn dark.
Speaker 1: Yeah, this has been a very dark election. I think
Speaker 1: that's a good way of putting it.
Speaker 2: Yeah, look the way I liken this is a little
Speaker 2: bit too. H here's another analogy that'll probably piss half
Speaker 2: for audience off.
Speaker 1: It's okay, It's okay, as long as we keep pissing
Speaker 1: off different halves than it all.
Speaker 2: Even say, it's a little bit like climate change in
Speaker 2: the sense that any one severe weather event like a
Speaker 2: hurricane is hard to attribute to climate change. But when
Speaker 2: you have a climate when people are saying violent things,
Speaker 2: and I don't think the parties are equally responsible for this.
Speaker 2: I think Trump is much more likely to engage in
Speaker 2: violent rhetoric. But there's plenty of objectionable stuff on the
Speaker 2: Democratic side too. You know, the risk of violence is
Speaker 2: higher and we've seen, you know, these two attempts on
Speaker 2: Trump's life. We saw, you know, Paul Pelosi, the speaker
Speaker 2: from Preacau's House's husband attacked. You had a shooting in
Speaker 2: a congressional baseball game back. I guess this was several
Speaker 2: years ago, twenty seven, but still kind of in this
Speaker 2: you know, modern era twenty sixteen onward. Then it's been
Speaker 2: kind of a violent time in American political life. You
Speaker 2: saw a shooting of Republicans in a congressional baseball game a
Speaker 2: couple of years ago. You know, this is not good. Sorry,
Speaker 2: I guess I'm studying the obvious, right. And you have
Speaker 2: also January sixth, in the summer of twenty twenty, you
Speaker 2: have protests that are not always peaceful. Frankly somewhere often not.
Speaker 2: You know, look, I think in politics people feel like
Speaker 2: they have license to behave really badly. They feel self
Speaker 2: righteous about it. I don't know, Maria, No.
Speaker 1: It's not good. And I think that I think we're
Speaker 1: forgetting you know so much about why democracy works. You know,
Speaker 1: what makes democracy different from other forms of government, That
Speaker 1: we're supposed to have peaceful transitions of power, That peace
Speaker 1: is kind of supposed to be built into the system,
Speaker 1: you know, right now the United States, and some of
Speaker 1: it's in some of what's going on is more resembling,
Speaker 1: you know, countries that are dictatorships, that are that that
Speaker 1: are not used to having peaceful transitions of power. And
Speaker 1: I think that that's highly problematic. And I hope that
Speaker 1: it's not a harbinger of things to come. I hope
Speaker 1: that we are we are looking at a blip in
Speaker 1: time that will that will disappear. But that's just hope,
Speaker 1: right that has no no basis in reality, And right
Speaker 1: now the reality is actually showing us that we're veering
Speaker 1: off into another direction. And you know, we need data
Speaker 1: and we need to see what happens, but right now
Speaker 1: it's it's not looking pretty.
Speaker 2: Yeah, Like I think Democrats feel like, oh, if we
Speaker 2: just kind of defeat Donald Trump, we solve the problem, right,
Speaker 2: But you know, I'm not sure sure how how true
Speaker 2: that is exactly. Clearly a lot of these other Republican
Speaker 2: candidates are trying to emulate Trump's image. It is interesting
Speaker 2: though that the GOP brand is not terribly popular, Like
Speaker 2: they're still losing a lot of these races for a
Speaker 2: Senate and the House will probably take over the Senate
Speaker 2: because you have these Democrats that are up in very
Speaker 2: red states that might tip the balance, but in his
Speaker 2: swing states are often down by by five or six points.
Speaker 2: And I think somehow, like somehow, Trump sometimes gets a
Speaker 2: pass from voters, or maybe just Trump is kind of
Speaker 2: a guy who is he has a certain charisma that
Speaker 2: resonates with a certain type of voter. People think that
Speaker 2: he is on their side, whereas you kind of see
Speaker 2: like the more charisma less version with say jd Vance
Speaker 2: for example. So maybe it's right that if Democrats win
Speaker 2: this election two and Trump is then one for three.
Speaker 2: Although who knows, is there any reason why he wouldn't
Speaker 2: run in twenty twenty eight. I don't inherently see why not. Right,
Speaker 2: age is the.
Speaker 1: Only thing that I might that I might say in
Speaker 1: case there's, you know, any infirmity or anything that really
Speaker 1: prevents him from running, I think that that's the only
Speaker 1: thing that would really stop him.
Speaker 2: I mean, he'd be the same age as Biden tried
Speaker 2: to run this year, although I guess it's a negative indicator.
Speaker 1: Yeah, look at how well that turned out. Yeah, So
Speaker 1: just to kind of wrap this up, is there anything
Speaker 1: else that you think we should be looking at in
Speaker 1: the next week. Do you expect to see any changes
Speaker 1: in the coming week or do we just need to
Speaker 1: kind of wait and see what happens.
Speaker 2: Yeah, I hate to I hate to sound like a
Speaker 2: broken record, but you know, are you seeing for Harris
Speaker 2: poll showing her up one or two points in Pennsylvania's
Speaker 2: constin Michigan? Failing that, you know North Carolina, Georgia, Arizona, Nevada, Well,
Speaker 2: then you know Nevada. Now I'm saying it weird.
Speaker 1: Nevadada, Novada, no matter, you got it?
Speaker 2: Okay. It's one of those words where I feel like,
Speaker 2: you know, like if you know someone named Megan, but
Speaker 2: then it's Megan, and then then you swear because like,
Speaker 2: oh it's not the way I think it is. Then
Speaker 2: you get screwed up between Megan and Megan. I just
Speaker 2: think people should consolidate these names, right, We should? You
Speaker 2: know how like in France you're only allowed certain surnames
Speaker 2: or Germany or something, right, Yep, we should stipulate Sarah
Speaker 2: with an H and Sarah with an A. You just
Speaker 2: got to get together and pick one.
Speaker 1: I could. I could see how that's going to play out. Nate,
Speaker 1: if that's part of your political platform. I'm going to
Speaker 1: tell you right now, you're gonna lose parents. Parents on
Speaker 1: both sides of the of the party spectrum are going
Speaker 1: to fight you to the death on that. They want
Speaker 1: their creative spellings.
Speaker 2: We're trying to like simplify these poor people's lives right there,
Speaker 2: spelled half the time.
Speaker 1: I completely agree with you, but I do not have children,
Speaker 1: and I think that a lot of people would disagree
Speaker 1: with us and would say that they need the freedom
Speaker 1: to spell the name however they want to spell it.
Speaker 1: And I think at some point that goes just a
Speaker 1: little bit too far. I'm all for simplification. Sarah's and
Speaker 1: Sarah's of the world unite. After this break, let's talk
Speaker 1: about Calshi and some prediction markets. Last week there was
Speaker 1: some major news in the prediction market space. So Nate,
Speaker 1: you know, we give this disclaimer all the time. You're
Speaker 1: an advisor for Polymarket. We're not talking about polymarket right now.
Speaker 1: Polymarket is not legal in the United States. There is
Speaker 1: a prediction market that is legal in the United States
Speaker 1: called cal she and last week it won its federal
Speaker 1: lawsuit against the Commodity Futures Training Commission in order to
Speaker 1: be able to offer contracts on which party will control
Speaker 1: the each House of Congress after the election. And this
Speaker 1: was a huge, huge deal, right because betting on elections
Speaker 1: has not been legal in the United States. It's been
Speaker 1: this huge lightning rod, this huge argument against prediction markets
Speaker 1: in general, and the fact that cal She won this
Speaker 1: lawsuit was just absolutely huge news. So right after it won,
Speaker 1: it actually offered these contracts, people started betting on them,
Speaker 1: and then a few hours later they had to free
Speaker 1: them because the CFTC said, hold on, you know, freeze,
Speaker 1: we want to contest this. We don't think this should
Speaker 1: be legal, and right now we're kind of in this
Speaker 1: holding pattern. No one knows what's going to happen to
Speaker 1: the people who already placed their bets last week during
Speaker 1: the few hours that vetting was open, and we don't
Speaker 1: know what's going to happen. They were supposed to potentially
Speaker 1: resolve this yesterday Monday. As of today, Tuesday, September seventeenth,
Speaker 1: they still have not resolved this. So the US Court
Speaker 1: of the Appeals and the DC Circuit is waiting. We're
Speaker 1: waiting to hear how they rule on this, and that's
Speaker 1: going to do a lot to determine the future of
Speaker 1: political betting in the United States. Let's talk about this
Speaker 1: because you know, this is something that cal she has
Speaker 1: been fighting for for over four years, and not just
Speaker 1: Calshie obviously other future markets, but Cals. She's been doing
Speaker 1: it from within the United States, bringing it through the
Speaker 1: court systems, and it's a big, big deal.
Speaker 2: Yeah. Whereas probably market has an agreement with the CFDC
Speaker 2: not to allowed trading in the US like I, as
Speaker 2: I need to say, whenever this type of subject comes up,
Speaker 2: I have a conflict of interest here. I am invi
Speaker 2: are to a competing prediction market called poly market. You know,
Speaker 2: the reason on aviasure to them is partly because they
Speaker 2: they compensate me, but also because I believe in prediction
Speaker 2: markets as a product. But look, the basic argument for
Speaker 2: prediction markets is that, you know, market risk inherently has
Speaker 2: to price in political risk anyway, that if you're thinking
Speaker 2: about how different classes of equities will move, or interest
Speaker 2: rates or you know, or foreign markets, you know, US
Speaker 2: policy toward China or whatnot, people already are factoring in
Speaker 2: who's gonna win the election, how political events might unfold,
Speaker 2: including like foreign elections for example, so why not allow
Speaker 2: people to bet on this directly instead of kind of
Speaker 2: filtered through other types of more imprecise commodities. You know.
Speaker 2: The CFTC says they're worried about market manipulation, and they
Speaker 2: can cite, for example, people playing placing fake poles out there.
Speaker 2: We've seen this sometimes actually, where you'll see people make
Speaker 2: up credible rumors of a poll. Whether they do that
Speaker 2: just to fuck with people or because it's a way
Speaker 2: to manipulate markets, I'm not so sure, you know, But
Speaker 2: the question is why use this in a different category
Speaker 2: than say betting on sports, where you have seen efforts
Speaker 2: to throw matches in manipulation, or trading equities and things
Speaker 2: like that, you know. I mean, if you have like
Speaker 2: a Donald Trump stock, you have things that are kind
Speaker 2: of proxies for election anyway. I mean Bitcoin often moves
Speaker 2: upward and downward. That's seen as Trump is seen as
Speaker 2: bullish for bitcoin. So if you have Trump having a
Speaker 2: bad debate like you had last week, for example, bitcoin
Speaker 2: goes down. So I don't know, I think it's I
Speaker 2: think the CFTC has always been very if you read
Speaker 2: the book my book, they're very villagy, right, They seem
Speaker 2: to think that like trading or gambling is is bad
Speaker 2: and and evil and will taint the political system when
Speaker 2: it's like, I don't know, you know, Alex, uh excuse me.
Speaker 2: You know, I always like the phrase that a bet
Speaker 2: is a tax on bullshit. You know, It's not uncommon
Speaker 2: for me to like be in an argument with somebody
Speaker 2: on Twitter and to say, Okay, you actually believe what
Speaker 2: you're saying, let's bet on it. Let's bet surreal money.
Speaker 1: Has anyone, by the way, ever taken you about it?
Speaker 1: Because I've seen you offer it to so many people,
Speaker 1: and I've never seen someone say yes.
Speaker 2: They're always they're always cowards, right, They're always cowards. They're
Speaker 2: always cowards because they don't actually mean what they say
Speaker 2: most of the time. Right, they're talking a big game
Speaker 2: and they don't actually mean what they say. And and
Speaker 2: I don't know, maybe it's a weird thing to want
Speaker 2: to like bet on all this stuff, but like, but yeah, yeah,
Speaker 2: by the way, we walk into Alan Lickman today. That
Speaker 2: feels like too much of a detour.
Speaker 1: We can, we can, but but first, uh, but first
Speaker 1: let's uh, let's let's stay on Calshi for a little
Speaker 1: bit and betting on elections. So you said a few things,
Speaker 1: and there there's one thing that you know that I
Speaker 1: completely agree with, which is that, you know, to really
Speaker 1: test someone's opinion, bet on it. Right. We did not
Speaker 1: invent this. I think I've cited Immanuel Khnt on this
Speaker 1: podcast before. You know. He was one of the original
Speaker 1: proponents that if you say something's going to happen, if
Speaker 1: you have a certainty in it, how much money are
Speaker 1: you willing to bet on it? Right? What will you
Speaker 1: place on it? And he did see this as a
Speaker 1: tax on bullshit and on false certainty, on unfalse confidence,
Speaker 1: and he thought that this would really be a very
Speaker 1: strong corrective towards people just prosaltizing and giving unfounded opinions
Speaker 1: and trying to you know, stand on a soapbox without
Speaker 1: actual knowledge or backing that you really needed to put
Speaker 1: your money where your mouth is. And so in that sense,
Speaker 1: you know, betting on politics great, right. It helps calibrate outcomes,
Speaker 1: It helps kind of figure out where things are standing,
Speaker 1: because people really have skin in the game as opposed
Speaker 1: to just kind of standing on their soapbox, which when
Speaker 1: it comes to politics, everyone has a soap books and
Speaker 1: everyone wants to scream loudly. But let's look at the
Speaker 1: other side of it. So you said something which was,
Speaker 1: you know, if we're betting on sports where people there
Speaker 1: has been manipulation, people have tried to throw games, why
Speaker 1: aren't we allowed to bet on politics? I would say,
Speaker 1: I think this is a huge problem in sports betting
Speaker 1: as well. We've talked about this, and if you think
Speaker 1: it's a huge problem in sports and that people are
Speaker 1: throwing games and that it actually is kind of adding
Speaker 1: some of this uncertainty to certain outcomes where you can't
Speaker 1: really tell, you know, did this person actually you know fumble,
Speaker 1: did they throw the game on purpose? Kind of there's
Speaker 1: it introduces a lot of shades of great in the
Speaker 1: moment that you can bet on some of these outcomes,
Speaker 1: including just these crazy prop bets, right, not just the
Speaker 1: outcome of the game, but there are these just insane
Speaker 1: prop bets that have a lot of money riding on
Speaker 1: them during the game. But think about like at the
Speaker 1: end of the day, like it's it's a sports game.
Speaker 1: I know there are listeners of the show who are
Speaker 1: huge sports fans, but like it's not going to change
Speaker 1: the fate of the world. We're talking about politics, those
Speaker 1: things become amplified because we're now playing in a different ballgame.
Speaker 1: Let's mix metaphors here and bring sports to politics. It's
Speaker 1: a different game that we're playing with much higher stakes,
Speaker 1: where any potential impropriety, manipulation, things that could actually throw
Speaker 1: elections one way or another, one outcome one way or another,
Speaker 1: they become much much bigger deals. Right, we actually have
Speaker 1: to pay attention to that. Now, I'm not What I'm
Speaker 1: not saying is this is the case and we can't
Speaker 1: allow betting on elections. What I'm saying is we need
Speaker 1: to talk about this, We need to consider it. We
Speaker 1: need to try to figure out, you know, what are
Speaker 1: the pros, what are the cons, what's the risk of this?
Speaker 1: And given that, what kinds of tools also do we
Speaker 1: want to offer? Because prediction markets don't just offer, you know,
Speaker 1: a straight out bet on the outcome of the election. Right,
Speaker 1: there are contracts, there are derivatives markets, There are all
Speaker 1: sorts of secondary things where you get to bet on
Speaker 1: also some things. And so even if we you know,
Speaker 1: once you and I talk about it, even if we
Speaker 1: agree that okay, some sorts of betting is okay, that
Speaker 1: doesn't necessarily mean that all sorts of betting is okay,
Speaker 1: and we can then go back to sports and say, Okay,
Speaker 1: these these things are not necessarily okay either. I'm talking
Speaker 1: a lot in generalities right now, just because I want
Speaker 1: to kind of lay out some of the points that
Speaker 1: I think we should discuss.
Speaker 2: Look, I think, you know, in some sorts, I think
Speaker 2: it kind of almost cuts the other way that, like
Speaker 2: there is economic value created. You know, you have more
Speaker 2: market efficiency and less deadweight loss when you're allowed to
Speaker 2: create on these things that move markets anyway instead of
Speaker 2: having to go through proxies. And that's a very University
Speaker 2: of Chicago economist hat thing to argue, Whereas I'm not
Speaker 2: sure there's any value per se created by sports betting.
Speaker 2: For some people, it's fun, for some people it's addictive.
Speaker 2: It's a tough game to win, to be sure. So
Speaker 2: I don't know, I mean, And there's also this argument
Speaker 2: that if things are more regulated, then it's easier to
Speaker 2: catch like market manipulation for better or worse draft kings,
Speaker 2: and FanDuel can say, yeah, we he it was unusual
Speaker 2: betting patterns. NBA, you should go investigate this, NFL should
Speaker 2: go investigate this. If it's regulated versus occurring in like
Speaker 2: offshore crypto markets and so forth. But anyway, I'm biased here.
Speaker 2: I'm clearly biased. I like better, I like trading right,
Speaker 2: and I cansult for one of these companies, So I'm
Speaker 2: totally totally biased. But I've always thought the CFTC was
Speaker 2: kind of nitty.
Speaker 1: Yeah, I mean, I can see that, but I can
Speaker 1: also see the argument for if you are able to
Speaker 1: manipulate markets for even for a short period of time.
Speaker 1: And by the way, last week there was an attempt
Speaker 1: to do this on poly market during the debates, right,
Speaker 1: there was an attempt to improve Kamala Harris's odds over
Speaker 1: a short period of time. One person bet over two
Speaker 1: point five million to move the markets. It didn't end
Speaker 1: up working, so the market ended up correcting. So this
Speaker 1: is an argument in favor of self correcting markets. But
Speaker 1: if you think about like a billionaire, right, who is
Speaker 1: willing to put in more money and willing to kind
Speaker 1: of do this in a more egregious way, even if
Speaker 1: it does end up correcting eventually. We know that especially
Speaker 1: in close selections, even rumors, even kind of things that say,
Speaker 1: you know, these days you can actually open most not
Speaker 1: most but a lot of news stories will actually say
Speaker 1: the polymarket odds right, We'll say like Donald Trump is
Speaker 1: at X, Kamala Harris's at why. So those things can
Speaker 1: be self fulfilling prophecies. They can actually influence people's perceptions
Speaker 1: of how something is going influence their behavior. There are
Speaker 1: these cycles where like, just psychologically speaking, I think it's
Speaker 1: something to think about.
Speaker 2: Yeah, there are a couple of concerns here. What is
Speaker 2: that Sometimes polymarket and other prediction markets, we'll have these
Speaker 2: complicated derivative contracts, like you can predict will Harris be
Speaker 2: ahead on poly market at X and Y time on
Speaker 2: zmy day, and then it may be worth it to
Speaker 2: try to move the markets that you win. The deritive
Speaker 2: contract like stuff like that should probably get cleaned up.
Speaker 2: And yeah, I mean, and there can be this kind
Speaker 2: of circular literalism almost where where you know, people assume
Speaker 2: the prediction markets are wise and then so actually one example,
Speaker 2: you remember this, a couple of weeks ago, they were
Speaker 2: rumors that there would be a special guest at the
Speaker 2: Credit Convention.
Speaker 1: People thought Beyonce was potentially gonna say that. That's thought
Speaker 1: That's where it ended up going.
Speaker 2: People thought Taylor Swift. People thought Beyonce right, and then
Speaker 2: Beyonce was up to like ninety seven percent on polymarket,
Speaker 2: and then TMZ releases a story where her spokesperson said, no,
Speaker 2: she's not even in the it's not even in Chicago
Speaker 2: right now, right, it's not happening. And that was a
Speaker 2: case where people look at the prediction markets and said, boy,
Speaker 2: they must know something. They must know something because they
Speaker 2: have gotten other stuff right. They were smart about the
Speaker 2: packed of the debates. They were smart about Harris. You know,
Speaker 2: the day that Tim Walls was named Jos Shapiro. I
Speaker 2: think they were. I know people were like scouting out
Speaker 2: the Tim Walls residents or something. So they are. They
Speaker 2: are remarkably right a lot of the time. And then
Speaker 2: but sometimes you have this overconfident phenomenon where where people
Speaker 2: think they're infallible and then and then there's a big
Speaker 2: And this is true for other types of markets too, right.
Speaker 2: I am not a complete believer in efficient market hypothesis.
Speaker 1: Yeah. So, so if you think about, once again, the
Speaker 1: repercussions when it's something that's more significant, right, like the elections,
Speaker 1: like politics, I think that there is room obviously for
Speaker 1: these type of markets to exist, and obviously there's an
Speaker 1: argument that they exist already, right, So as you said,
Speaker 1: regulate like allow them and and be strict about it.
Speaker 1: But when you're talking about things like these derivatives, contracts,
Speaker 1: all these secondary things, like, I think that we need
Speaker 1: to have some rules in place, right, Like there's not
Speaker 1: having allowing markets for political betting does not mean allowing
Speaker 1: all markets on everything with every single type of financial instrument, right,
Speaker 1: that one does not follow from the other. We can
Speaker 1: have very specific rules even with crypto, right, like the
Speaker 1: you've had we've talked about ethan bitcoin and you know
Speaker 1: the very narrow like the path that they had to
Speaker 1: go through, right to allow one very specific type of
Speaker 1: financial instrument in order to be able to trade in proxy. Yeah.
Speaker 2: Yeah, And this is true in sports betting markets too,
Speaker 2: which is that there's so much pressure to offer so
Speaker 2: many different derivatives of markets for every possible type of
Speaker 2: event and things like that, and the more robust business
Speaker 2: model is to kind of keep it simple, right, You
Speaker 2: commit on you know, the money line and the point
Speaker 2: spread and the total. If there's a player injury situation,
Speaker 2: then they'll take it off the board instead of being
Speaker 2: subject to inside information. They're not gonna let you bet
Speaker 2: on things. This is again like the more robust, more
Speaker 2: robust betting platforms like Circa, for example, which is known
Speaker 2: for actually taking action from sharp winning players and properly
Speaker 2: doing handicapping or bookmaking I should say, not handicapping. But
Speaker 2: there's this pressure to like offer you eat, to bet
Speaker 2: on everything and have this gicanic menu. It's often a
Speaker 2: false front, right if you try to bet some of
Speaker 2: the weird stuff on DraftKings or FanDuel, then you'll get
Speaker 2: limited right away if you're any good. So keeping things
Speaker 2: simple I think is a lesson here for everybody.
Speaker 1: Yeah, keeping things simple and also potentially potentially limiting in
Speaker 1: the moment things right, Like one of the one of
Speaker 1: the issues with last week's attempt to manipulate the markets
Speaker 1: was it was during the debate, right, they were trying
Speaker 1: to keep those markets open during a very specific window.
Speaker 1: It's like when you're allowed to play sports bets on
Speaker 1: certain outcomes in the middle of a game, and they're
Speaker 1: even you know, in some countries, like the sports bets
Speaker 1: will actually pop up on your screen as you're watching
Speaker 1: a game, and you can, you know, you can place
Speaker 1: bets and you know, we know that if this appeals
Speaker 1: to your djen Hart on some level. But I think
Speaker 1: that especially when it comes to politics, limiting things like
Speaker 1: that and trying to figure out, okay, what what is necessary?
Speaker 1: What is least likely to be manipulated? How do we
Speaker 1: place limits on manipulation? Right? Could it be that, like
Speaker 1: you actually are not allowed to bet ten million dollars?
Speaker 1: Can we Is that? Is that a thing? Or or
Speaker 1: is that like not a thing?
Speaker 2: Right?
Speaker 1: Should we allow bets of any size on anything? You know?
Speaker 1: How do we how do we play safely? Well?
Speaker 2: The thing is, there's so much money in elections that
Speaker 2: I mean, and there have, by the way, been so
Speaker 2: in two thousand and eight. There are reports of people
Speaker 2: trying to buy John McCain's stock, or buying John mccainstock
Speaker 2: on prediction market platforms back then because it was a
Speaker 2: relatively cheap way to move the media narrative. Right, you
Speaker 2: spend a few thousand bucks and someone writes a story
Speaker 2: about I'll look the smart traders know that McCain is
Speaker 2: searching now on whatever it was back then. You know,
Speaker 2: now that the volumes are more liquid, it's harder to
Speaker 2: do that. You can't really like spend a thousand bucks
Speaker 2: and have any lasting effect.
Speaker 1: But yeah, but you can spend millions and have an effect. Right,
Speaker 1: we did see that they did. Like I said, and
Speaker 1: I just keep going to last week because it just
Speaker 1: happened last week. Right, this is just something that's easily
Speaker 1: accessible to my mind. The two and a half million
Speaker 1: and those few beds did move the markets, right, they did, correct,
Speaker 1: But now, like let's assume it was on something that
Speaker 1: was more more important. I do think that we just
Speaker 1: need to figure out, you know, how do we take
Speaker 1: this into account, How are we aware of this, How
Speaker 1: do we make sure that, you know, we can have
Speaker 1: markets that actually reflect real sentiment opinion, so they do clear,
Speaker 1: you know, so that they are put your own money
Speaker 1: where your mouth as types of things, as opposed to
Speaker 1: how do I make more money by trying to kind
Speaker 1: of manipulate this for a short period of time, or
Speaker 1: how do I get my preferred candidate to win by
Speaker 1: you know, putting one hundred million in the prediction markets
Speaker 1: on my candidate, moving the narrative, getting those stories and
Speaker 1: actually in a very very tight election where we're talking
Speaker 1: about you know, one point lead here, one point lead there,
Speaker 1: where something like that might actually, as we know, as
Speaker 1: we know with Pokernate, you know, every every little piece
Speaker 1: of a percentage matters when you're talking about it.
Speaker 2: So very it's also very directionally unclear though, why you
Speaker 2: even care that much about the narrative. It's it's not
Speaker 2: clear that it you know, whether it makes people complacent
Speaker 2: or makes people turn out or whatever else, it's not
Speaker 2: entirely clear. That's funny thing true. You've had this funny
Speaker 2: thing where, you know, when Harris, now she's been moving
Speaker 2: back up in the forecast, but a period of a
Speaker 2: week or two ago, when she was moving down in
Speaker 2: the Silver bulletin forecast, you had both Trump and Harris
Speaker 2: citing the forecast. Trump said that Nate still Ryer's a
Speaker 2: pretty smart guy, which is not what he said about
Speaker 2: him four years ago. Meanwhile, the Harris campaign is blasting
Speaker 2: out the forecast and saying, look, we're the underdogs in
Speaker 2: this race, trying to manage expectations. That speaks to the
Speaker 2: different personality types between Democrats and Republicans. But people, you know,
Speaker 2: I think there are a lot of can I use
Speaker 2: this term, a lot of losers out there who are
Speaker 2: mistaken winning the news cycle or yunking on somebody for
Speaker 2: winning the election, and they often have nothing to do
Speaker 2: with one another. You know, the more you can chill
Speaker 2: out and be looking toward the long term what's your
Speaker 2: long term strategy for November, and the better off you
Speaker 2: are than trying to like win the day quote unquote.
Speaker 1: Do we know whether voter turnout is affected by your
Speaker 1: perception of how close the election is versus how well
Speaker 1: your candidate is doing? Because you know, if you think
Speaker 1: back to Hillary Clinton versus Trump, because she was such
Speaker 1: a favorite, even though we know that in your model,
Speaker 1: Trump had a twenty eight twenty eight percent yes correct
Speaker 1: chance of winning that you know that you're less likely
Speaker 1: to vote because you'll say, oh, you know, it doesn't
Speaker 1: really matter that much. Like do we have do we
Speaker 1: have good data on how that works?
Speaker 2: There's data that turnout is higher the closer the polls are.
Speaker 2: Whether that's because of the polls or not is hard
Speaker 2: to know. So yeah, in swing states they tend to
Speaker 2: have holding other factors equal higher turnout. I mean, you know,
Speaker 2: again we don't know how exogenous or indogenous this is. Yea,
Speaker 2: the campaigns spend more in those states and knock on
Speaker 2: more doors, and there's more advertising and the candid's visit
Speaker 2: and all those things. Right, there's more infrastructure. So so
Speaker 2: the causality is hard to know, but there is that
Speaker 2: pattern for sure.
Speaker 1: So in that sense, that's where the narratives end up
Speaker 1: mattering a little bit, right, where if we can depending
Speaker 1: on how we can frame the cycle, frame how close
Speaker 1: the election is, who's ahead, who's behind. Potentially, right, it
Speaker 1: might affect a thousand voters, two thousand voters, but sometimes
Speaker 1: that's all you need. I know that in the midterm
Speaker 1: election in Nevada, during which I voted not a not
Speaker 1: a not a secret voted for the Democrats, the Democrats
Speaker 1: ended up carrying some of those seats by a few
Speaker 1: thousand votes. I think it was like two thousand something, right,
Speaker 1: It was like tiny and and that's when you realize,
Speaker 1: oh wow, like it actually does matter exactly how many
Speaker 1: people went out to the polls. Once again, I as
Speaker 1: you know, I am all for prediction markets, I'm for
Speaker 1: betting on outcomes. I just think that, you know, these
Speaker 1: are all really important questions and we should be looking
Speaker 1: at just like you look at Alaska, Alaska, Alaska. We
Speaker 1: should consider edge cases, We should consider these spots where
Speaker 1: it might affect a tiny fraction of people, but that
Speaker 1: tiny fraction is enough in swing states. You know, these
Speaker 1: are these are things that we should talk about still,
Speaker 1: even if it's not very likely. So let's say a
Speaker 1: break and then onto lighter things like air conditioning.
Speaker 2: Some Maria, I've been traveling. I was in London a
Speaker 2: week and a half ago. I was in Wyoming for
Speaker 2: last week's episode. Now I'm in San Francisco. The result,
Speaker 2: I'm like jet lagged in both directions, and it's just
Speaker 2: completely random. When I get hungry. Sometimes I'm like starving
Speaker 2: at like five in the morning, and then not all
Speaker 2: hungry during regular people hours anyway. So I have not
Speaker 2: been in on the gospel your air conditioning situations. I
Speaker 2: just want you to take it away. What is going
Speaker 2: on with your ac Nate.
Speaker 1: You've been to my house in New York, and you
Speaker 1: know that we used to not have air conditioning. We
Speaker 1: you know, it's an old round stone. We had window
Speaker 1: units and that is how we air conditioned our apartment.
Speaker 1: And you know, New York summers have been getting quite
Speaker 1: hot and quite sticky, and this was just getting more
Speaker 1: and more unbearable. I thought, I was doing something really
Speaker 1: good and finally upgrading our you know, old apartment that
Speaker 1: had window units, two split AC units that get installed
Speaker 1: in the wall. Much more efficient, much nicer. Fast forward
Speaker 1: to today. We weren't there when these units got installed.
Speaker 1: Two of them were great. There are three rooms in
Speaker 1: my apartment. The one in the bedroom not so great.
Speaker 1: There is a pump that will not shut.
Speaker 2: The suck up.
Speaker 1: This is the loudest water pump you have ever heard.
Speaker 2: It's just you imitate it. Can you imitate it?
Speaker 1: Glug glug?
Speaker 2: Okay, okay, all right, yeah.
Speaker 1: Very good and very loud. And it does it all
Speaker 1: the time, so not just when there's water in it.
Speaker 1: The reason it's so loud is that it does it
Speaker 1: when there's no water at it either. So anyway, completely
Speaker 1: faulty needs to be replaced. Has not been patched up
Speaker 1: because we complained immediately when when.
Speaker 2: We saw this.
Speaker 1: So our bedroom is just one big gaping hole, holes
Speaker 1: in the wall, holes in the ceiling, you know, exposed insulation,
Speaker 1: and this fucking pump which makes it impossible to sleep.
Speaker 1: And so basically there's no ACA in the bedroom. You
Speaker 1: cannot run that thing because it is so damn loud.
Speaker 1: And I honestly, like, I do not know what to
Speaker 1: do because when I told them multiple times that this
Speaker 1: needs to happen, the latest is that it will not
Speaker 1: happen until mid October, by which point I will be
Speaker 1: long gone in Las Vegas, which is.
Speaker 2: My I got right. I got news for Maria, got
Speaker 2: news for you. It gets a little cold, and I
Speaker 2: don't know what boys I'm doing here. It gets cold
Speaker 2: by October. Who cares about our conditioning?
Speaker 1: No one cares about a sea by October. But we
Speaker 1: do care about the fact that our walls and ceilings
Speaker 1: are wide open and the insulation and it is completely exposed.
Speaker 1: And we live in on the top floor of a
Speaker 1: tiny walk up, so this actually does matter because the
Speaker 1: insulation in this building ain't the best. So Nate, like,
Speaker 1: I honestly do not know, Like, what is my plus
Speaker 1: EV move? What am I supposed to do to try
Speaker 1: to get this AC installed as quickly as possible and
Speaker 1: just get this work done.
Speaker 2: Yeah, there's some case where they kind of have you
Speaker 2: by the tail. I was gonna say, of the balls,
Speaker 2: but I don't want to genderize it.
Speaker 1: They they can have you buy the balls. I'm cool
Speaker 1: with it.
Speaker 2: Uh Yeah, it was in a TSA situation. So the
Speaker 2: TSA doesn't always like it when you bring your podcasts
Speaker 2: equipment through the planet. They don't like your mics or whatever, right,
Speaker 2: and so there was just like long line. There was
Speaker 2: some guy who decided to bring a knife, like a
Speaker 2: dual sided knife in his carry on luggage, which you know,
Speaker 2: some German fellow. That seems like a pretty bad idea
Speaker 2: at a major commercial airport. Has caused a big delay,
Speaker 2: And I'm like, I could complain about this, but that's
Speaker 2: just gonna make it worse, right, there's no saying nothing
Speaker 2: is the only plus EV play in that situation. I
Speaker 2: think if they have you by the balls, then you
Speaker 2: got to you gotta.
Speaker 1: Yeah, I think they kind of have us by the balls,
Speaker 1: and there's there's really nothing that I can do and
Speaker 1: it but it's awful. I feel like I should be
Speaker 1: able to do something like maybe get someone else to
Speaker 1: finish it, but then that someone else is going to
Speaker 1: charge you know, another another arm and a lug to
Speaker 1: do the replacement work and fix this. And I just
Speaker 1: it's very rare for me to be in a situation
Speaker 1: where just it seems like there's no plus EV outcome right,
Speaker 1: Like I just I wanted to do something good for
Speaker 1: the apartment, to make it more livable, and at the
Speaker 1: end of the day, it's a million times worse than
Speaker 1: the situation we had before, and and my decision making
Speaker 1: mind wants there to be a decision calculus that says,
Speaker 1: uh huh, this is the correct branch of the decision tree.
Speaker 1: But it seems like the correct branch, as you say,
Speaker 1: is just saying nothing and hoping for the best and
Speaker 1: trying to be nice, which is what I've done. But
Speaker 1: being nice has gotten me absolutely nowhere so far.
Speaker 2: Sometimes, Maria, there are only negative V moves and you
Speaker 2: have to pick the least negative EV move.
Speaker 1: That's not what I want to do to say.
Speaker 2: Risky Business is hosted by me Nate Silver and.
Speaker 1: Me Maria Kanakova.
Speaker 2: This episode was produced by Isabel Carter. Our associate producer
Speaker 2: is Gabriel Hunter Chang. Our engineer is Sarah Bruger. Our
Speaker 2: executive producer is Jacob Goldstein.
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