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The Strange History Of Betting On Elections: It Wasn't Just About Money

Aug 26, 2015
Originally published on August 27, 2015 2:01 pm
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Transcript

AUDIE CORNISH, HOST:

All the poll numbers can seem like a little much this early in the presidential race. The election is 15 months away. But to some people, this is fun. And we're going to hear now about a time in American history when making bets on the race were the thing to do. Here's Keith Romer from our PLANET MONEY team.

KEITH ROMER, BYLINE: A hundred years ago, the presidential election was the equivalent of the Super Bowl today. People would gather downtown when the results were coming in at taverns or the town square. They would argue with each other about who was going to win.

PAUL RHODE: If you look at pictures of Election Day at that time, it's a rollicking party.

ROMER: This is Paul Rhode. He's an economic historian at the University of Michigan. He says there was a lot of hard cider and a lot of betting - all kinds of betting.

RHODE: When you lose, you have to push them around in a wheelbarrow or carry them on your back or shave your face in front of them so that they can see they won, you lost.

ROMER: One of the strangest bets involved the losers eating crow, which, it turns out, is not just a thing people say.

RHODE: Yes, they had to eat crows.

ROMER: Of course, people also bet money. In New York City, you could place a bet at a bunch of the big hotels or go right down to the financial district where these official betting commissioners had set up shop. In 1916, the race between Woodrow Wilson and Charles Evans Hughes is super close, and it creates a lot of betting action.

RHODE: Just bet vast sums on it, the equivalent today of over 200 to $300 million on that election.

ROMER: People bet because it was fun. But the betting also produced something really valuable - information on who might win. The daily odds would run in the big newspapers, right on the front page.

RHODE: They don't have Gallup polls yet. They don't have scientific polls yet. And it turns out that the odds are remarkably accurate.

ROMER: In fact, of the 15 presidential elections between 1884 and 1940, Rhode says the markets were only ever wrong once. The market knows things. Eventually, election betting goes away for a bunch of funny little reasons.

RHODE: The first would be the rise of scientific polls.

ROMER: So the country no longer needs all the information that came from the betting. Also, betting on horse races gets legalized in New York, so gamblers spend their money at the track now. And finally, Wall Street decides that election gambling is bad for their reputation.

RHODE: They want to make a distinction. They don't want people to say, oh, all that activity on Wall Street is gambling.

ROMER: Which, you know, who would ever think that? These days, if you're really determined to bet on the election, you can wager small amounts of money in something called the Iowa Electronic Markets, a research project of the University of Iowa. But otherwise, the easiest way to put down a bet on your candidate is to leave the country.

MICHAEL SHADDICK: It's been a very, very lively market, especially on the Republican side. It looks very hard to predict who's going to win there.

ROMER: This is Michael Shaddick (ph), a bookmaker for the firm Ladbrokes, which, as you can probably tell from his accent, is in England. People over there are already betting on who our next president will be.

SHADDICK: Worldwide, there'll be hundreds of millions of pounds bet on the outcome of the election. Probably, this'll be the biggest political betting event ever.

ROMER: When we spoke, Ladbrokes had Hillary Clinton as the favorite at even odds. After that was Jeb Bush at 7 to 2. And in third place, Donald Trump at 16 to 1. A few weeks ago, Trump was 200 to 1. For NPR News, I'm Keith Romer. Transcript provided by NPR, Copyright NPR.