A busy time for politics traders
The PredictIt politics trading platform crashed on the night of the US presidential election for about four hours, leaving many users enraged. PredictIt tweeted about the outage at about 8:30pm ET on November 3:
Unhappy traders replied to the tweet with a wide-ranging set of responses, including some that threatened potential legal action.
The outcome of the election was looking very uncertain at the time. Pre-election, many experts believed that Democratic opponent Joe Biden would be an easy winner over current President Donald Trump. With Trump winning some important states he won last election, but where Biden was thought to have a slight edge this time, the odds started to turn.
Outage led to missed opportunities
Across betting platforms worldwide, Trump flipped from being the underdog to becoming the favorite to be the next president around the time of the outage. The current president’s share price on PredictIt went from $0.40 to $0.61 during this period, while Biden’s price dropped to $0.55 from $0.65.
traders unable to take advantage of the price changes before Biden reclaimed the lead
The platform site downtime during what marked a pivotal shift in the political landscape left traders unable to take advantage of the price changes before Biden reclaimed the lead. By the time PredictIt was back up and running, Biden’s share price was up to $0.76 and Trump’s was as low as $0.31.
To add to the unhappiness of traders, another outage reportedly occurred Wednesday afternoon.
Is PredictIt legal in the US?
Americans cannot legally place bets on political events, even in areas where sports betting is legal. However, the PredictIt platform can legally operate in the country thanks to the ‘no-action’ relief letter it has from the US Commodity Futures Trading Commission (CFTC).
PredictIt has similarities to the stock market, as users buy shares that relate to the outcome of an event, such as the US presidential election. The shares have a price of between $0.01 and $0.99. If Joe Biden won the election, traders holding shares for the former US vice president would receive a payout of $1 per share, minus fees. Those who bought shares for Donald Trump would get nothing.
PredictIt users can trade shares back and forth, with the prices being based on the current probability of a candidate winning. The owner and operator of the platform is New Zealand’s Victoria University of Wellington.
US election a massive betting event
Sportsbooks have been taking in many bets for the 2020 US election. Betfair recently estimated that it will have handled over £400m ($523m) in wagers by the end of the election, a feat it has now achieved. The biggest bet on the Betfair platform was a £1m ($1.3m) stake on Joe Biden. A former British banker also reportedly bet $5m on a Donald Trump win with sportsbooks in Curacao.
While the election outcome is not yet official, some sportsbooks are already starting to pay out on a Joe Biden victory. Australian operator Sportsbet announced Thursday that it has forked out AU$23m (US$16.6m) to bettors who backed a Biden win.