Cuomo’s futures hot on predictive exchanges

(The Center Square) – As New York Attorney General Letitia James announced Tuesday that an investigation substantiated sexual harassment claims against Gov. Andrew Cuomo, it profoundly affected the markets.

Not on Wall Street, mind you, but in the online realm in predictive exchanges – such as PredictIt, where U.S.-based adults can invest, or buy shares, in the future prospects of elected officials, political candidates and legislative actions.

While legalized sports betting has grown across the United States, betting on elections and other political events remains off limits in regulated jurisdictions. However, PredictIt operates as an experiment with permission from the U.S. Commodity Futures Trading Commission.

It’s a research project established by Victoria University in New Zealand. The anonymous data generated by PredictIt traders is used worldwide in studies in such fields as microeconomics, political science, computer science and game theory.

Through 11 am ET Tuesday, based on where markets stood, PredictIt traders saw Cuomo as someone who faced a significant challenge for re-election next year but still seemed safe from resignation or being impeached even as he faced many scandals.

That changed rather suddenly, according to PredictIt Public Relations Director Lindsey Singer.

In moments, shares that Cuomo would remain in office at the end of the year went from 88 cents to 51 cents. They would continue to fall later in the day after the governor released his response and calls for his resignation or impeachment cascaded from state and national officials.

“It was interesting that as this unfolded and traders knew that there was this press conference about the happen. Sometimes that causes dramatic movement,” Singer told The Center Square on Thursday. “But in this case, it didn’t until James mentioned that the final results of the investigation that he had violated state and federal law, and then we saw that dramatic drop in the market.”

Shares ended Tuesday at 34 cents and fell again Wednesday to 27 cents. As of Wednesday afternoon, they were trading at 25 cents. Conversely, shares that Cuomo won’t be in office are currently available at 76 cents a share.

If a market is open, traders can buy shares, change their position or sell their stake at any time provided there is a seller or buyer available. When the market closes, those who have shares in a correct outcome receive $1 per share. Each market or question is limited to 5,000 traders. Traders also are held to an investment limit of $850 on any market.

Besides the year-end question, PredictIt currently offers three other futures markets associated with Gov. Cuomo. Traders can take action on if he will resign by Sept. 1, if he’ll be impeached by Sept. 1 and which candidate will win the Democratic gubernatorial primary next year.

On the latter question, trading had Cuomo as a slight favorite among other prospective candidates. His shares through Tuesday morning traded at 42 cents each, and shares for James, who has not announced a run but has been rumored as a potential candidate, were about 10 cents cheaper.

But all that shifted as well during the press conference as traders made James the favorite, with Lt. Gov. Kathy Hochul the second choice and Cuomo slipping to third. The governor’s shares fell from 42 cents to 16 cents and have continued to drop, as they’re available for nine cents each on Wednesday.

Shares for James are 42 cents, Hochul’s are at 30 cents.

Singer told The Center Square that trading is not nearly as heavy as last year with the presidential election. Still, thanks partly to the Cuomo investigations and the upcoming recall election in California, there are 156 markets available for trading, which Singer said is a good number for an off year.

More markets will become available as the 2022 elections draw nearer, she added.

While state-licensed sportsbooks cannot get in the action in the U.S., political betting is available in other parts of the world. That includes Great Britain and offshore operators based in the Caribbean and Latin America, and those sportsbooks do offer odds on US politics.

Paul Krishnamurty, an English-based betting consultant for such operators as Betfair and BetOnline.ag, told The Center Square on Thursday that Cuomo’s odds for remaining in office were trending the same as the prices on PredictIt.

On Wednesday, BetOnline.ag posted odds of 1-2 that Cuomo would leave office before the end of the year. Krishnamurty said those odds on Thursday were 1-7, meaning a $700 bet would net a $100 profit. At the same time, odds Cuomo will stay in office have lengthened from 3-2 Wednesday to 4-1.

Krishnamurty said that more people are betting on Cuomo to stay, but he said that’s likely because bettors find the odds attractive.

Similarly, BetOnline has James as their favorite to be the Democratic nominee next year, with odds of 4-7, meaning a $175 bet would net a $100 profit. Those odds also equal an implied probability of 63.6%.

Hochul is its second choice at 11-4, with Cuomo third at 10-1.

Disclaimer: This content is distributed by The Center Square