Who will win the presidential election? Want to bet?

PredictIt.org, a political futures website where participants can bet on political outcomes, announced on April 1 that President Biden is the slight favorite over former President Donald Trump at 48 cents to 47 cents per share in the general election. It showed that there is. These prices reflect races that are within the margin of error of many polls.

Here's how it works: A user can bet up to $850 on a single outcome, but the average stake is around $100, according to a PredictIt spokesperson. On the market platform he makes bets by purchasing stocks with prices ranging from 1 penny to 99 cents.

Once the outcome is determined, the winner receives $1 per share, while the loser receives nothing. PredictIt takes his 10% of the profits as a fee, and withdrawals take his 5% fee. This site is required to issue an IRS Form 1099 to traders whose net income exceeds $600 in a calendar year.

A user who bet $850 could earn $828 on a 48-cent stock if Biden wins, or $862.20 excluding withdrawal fees if Trump wins.

Similarly, users could bet on Trump's vice presidential nomination, with the frontrunners being South Carolina Sen. Tim Scott (25 cents), South Dakota Governor Kristi Noem (19 cents), and Hawaii's Former Democratic Congresswoman Tulsi Gabbard (12 cents). cents), New York State Representative Elise Stefanik (11 cents), and Arkansas Governor Sarah Huckabee Sanders (6 cents).

For Democrats, Vice President Kamala Harris' stock was trading at 92 cents to give her the right to remain either president or vice president.

You don't have to be a political expert to place a bet, but it never hurts. Rachel Bitekofer, a political scientist and author, says she has a PredictIt account with a “token balance.”

Her early analysis shows President Biden winning re-election, Democrats taking back the House, and the Senate split evenly between the two parties. “I don't think there's any inherent harm in political gambling unless people are putting in exorbitant amounts of money,” she says.

Additionally, some gamblers who were not interested in politics will follow the news more closely and participate in the democratic process, she added. “Having more people understand how politics actually works is probably a good thing overall,” Bitekofer said.

PredictIt, run by New Zealand's Victoria University, has about 80,000 active users, all of whom are U.S. citizens and who span the ideological spectrum, said PredictIt spokeswoman Lindsay Singer. Masu. The site's market research shows that the percentage of Democrats, Republicans and independent voters registered on the platform closely reflects the makeup of voter registration nationwide.

Singer said the traders, many of whom are between the ages of 25 and 40, had bet about $150 million on PredictIt before the 2020 election.

PredictIt is an extension of the efforts of the Iowa Electronic Market, managed by the University of Iowa, which has been making small bets on politics since 1988. The research project aims to test the accuracy of the “wisdom of crowds,” according to its website. Iowa Electronic Market.

The Commodity Futures Trading Commission has called for PredictIt to shut down in August 2022 after rescinding a so-called no-action letter first issued in 2014. The no-action letter meant that agency staff would not recommend taking any enforcement action against PredictIt for operating election markets.

The Fifth Circuit Court of Appeals in New Orleans ruled last year that the CFTC's 2014 letter was functionally equivalent to a license. Therefore, the revocation of that no-action letter was a final representation action that could be challenged in court. The question of whether PredictIt is operational remains in litigation.

“We expect to continue operating the market until at least the end of this year.” [election] “This is because the injunction already in effect protects the operation of the market while the litigation continues,” a PredictIt spokesperson said.

The CFTC still wants to shut down PredictIt, saying in a statement: [the Commodity Exchange Act] In this case, Congress directed agencies not to approve gaming event contracts that are prohibited by state or federal law and contrary to the public interest. ”

Nick Fortuna is a writer living in Ocala, Florida. Contact him at reports@wsj.com.