“It’s been a way to monetize my political addiction,” Pipkin said. “And a great way to meet people.”
There are some 80,000 people who use PredictIt, which has began operating in 2014. Most of the people who use the site do so casually—throwing a few bucks on an election here or there. But there are thousands of obsessives like Pipkin for whom PredictIt can be more than just a hobby or even a job, it can be a lifestyle. There are “super forecasters” who spend endless hours watching C-SPAN and reading political tip sheets, and occasionally go to extraordinary lengths in search of an edge. Pipkin has a group text with a half-dozen other traders he now considers his friends. They chat nearly every day.
“It’s such a weird corner of the internet,” Pipkin says.
The website was started by a man who first gained infamy as “The A-Bomb Kid” after creating a how-to guide for building a nuclear weapon while in college. There’s a podcast (there’s always a podcast) titled “Star-Spangled Gamblers” hosted by politics junkies who bet big money on PredictIt and discuss whether they are “idiots” or “idiot savants.” And the kinds of bets that PredictIt has allowed over the years can themselves be unconventional. Some of them can come off as a bit provocative by appearing to make sport of grave topics in the news.
In February 2020, as Americans were just getting familiar with the word “coronavirus,” PredictIt opened a market on whether the World Health Organization would declare a “pandemic” before March 6 (the overs prevailed when the WHO made its call on March 11). Last year, as Russia pounded the Ukrainian capital with artillery, one of PredictIt’s most-popular markets was whether Vladimir Putin would remain the Russian president through 2022.
The way it works: users buy “shares” of a market and can cash out anytime. Joe Biden, for example, is currently trading at 52-cents a share to be the 2024 Democratic nominee, and if that happens, people who bought a stake in him can sell each share for the full dollar.
Kelvin Brumm, a trader from Phoenix who lost his job at a construction company during the pandemic, says he’s won around $50,000 per year since then by placing wagers with PredictIt.
“I use my mom as my best barometer,” he says.
Brumm’s mom, whom he considers a good stand-in for the median voter, doesn’t like Democrats but thinks Republicans have gone off the deep end he says, and so before the midterms he bet against a “bunch of freaks” the GOP had put up for the Senate. He cleaned up when they lost (thanks, mom!).
Last August, something happened that not even Brumm’s mom saw coming: The government moved to shut down PredictIt.
The news sent the political bettors into a tizzy. The podcasters recorded an “emergency” episode about the CFTC’s announcement, in which PredictIt’s imminent demise was discussed in sarcastically over-serious (but still pretty serious) terms. “In a moment of crisis, my first reaction — like, the Twin Towers just got terrorist-bombed — my first reaction is to blame,” said Alex Keeney, a.k.a. “Keendawg,” a co-host of the podcast at the time. “It’s to find out who is culpable, and bring them to justice.”
PredictIt was always a bit of a legal anomaly. Generally, the United States outlaws betting on political outcomes, but there can be an exception noncommercial purposes. PredictIt operates under limitations: bets are capped at $850 limits, and there can be no more than 5,000 people at a time in any given market; they cannot offer contracts on sports, or on when people will die or whether they will get kidnapped. Its founder, John Aristotle Phillips, created the site in 2014 as part of a collaboration with Victoria University of Wellington, in New Zealand, which had created a futures exchange tied to political events. The Commodity Futures Trading Commission, the federal agency that regulates markets, issued Victoria what’s known as a “no-action letter,” which said it could have the exchange as long as it was an “academic exercise” and that the university wouldn’t profit from it.
But the agency now has signaled a change of heart. It said PredictIt could no longer offer new markets, and that all existing ones would have to close by February 15. “They grew to a point where they violated the terms of the letter,” Steve Adamske, a spokesman for the agency, told The Washington Post.
Phillips has filed a lawsuit arguing that the CFTC’s move to shut down the company was “arbitrary and capricious” and that CFTC offered no rationale for why this is happening now. The closest thing to an explanation Phillips said he received was when the CFTC chairman, Rostin Behnam, said in an Aug. 1 video conference call: “I’m tired of getting pressure from others who want to do what you do.” (The CFTC said it could not verify the substance or the context of the remark Phillips described. “The Chairman did meet with representatives of Victoria University and others at their request to hear them out,” Adamske wrote in an email. “The reality is that the university did not operate its market in compliance with the terms of the No-Action Letter.”)
Shutting down the company next month would harm thousands of people with outstanding bets — like, for example, whether Donald Trump will be the 2024 Republican nominee for president (Trump is currently trading at 32 cents per share, trailing Florida Gov. Ron DeSantis who is trading at 36 cents) — that won’t be settled until after the February deadline. (The U.S. Fifth Circuit Court of Appeals in Louisiana is weighing whether to issue an injunction that would keep all current markets open in the meantime.)
“I kind of bet the company on this,” Phillips said.
He was sitting in the PredictIt offices, located a stone’s throw from the Capitol in a building with a green and blue sign out front that says, “PredictIt: Let’s Play Politics.” The office is decorated with various political ephemera. On this particular day a yellow Labrador named Lady was having a case of the zoomies in the hallways. Phillips, though, seemed calm as he estimated the odds that his website would survive its showdown with the feds: He gave PredictIt a 70 percent chance of prevailing.
“I’m a buyer,” Phillips said. “But at what price?”
He is a risk-taker. As a junior at Princeton University, in 1976, Phillips bet that he could design an atomic bomb for one of his physics classes. After he successfully produced a 34-page plan for a beachball-size explosive that weighed 125 pounds and could explode with half the force of the Hiroshima bomb, he became a quasi-famous as “The A-Bomb Kid”; People Magazine profiled him, and he appeared on “To Tell the Truth,” a game show where guests described their outlandish-sounding lives and contestants had to figure out who was lying. In 1980, Phillips bet that he could turn his celebrity into a seat in Congress, and ran for the U.S. House of Representatives — twice, losing both times.
But some of Phillips’s other bets paid off. He and his brother, Dean, started a company that they named Aristotle, which compiled and sold lists of eligible voters to campaigns. It was a lucrative business that helped lead to the kind of voter micro-targeting that has since become commonplace in campaigns. Phillips started PredictIt under the Aristotle umbrella in 2014, pairing up with Victoria University and its futures exchange. Phillips contends that the site is an academic exercise at heart, even as it has grown into a website with millions of dollars traded each a year. (PredictIt collects a fee when users cash out, but Phillips says the website basically breaks even.)
PredictIt makes its data publicly available, and dozens of research institutions have made use of it for studies of microeconomics and political behavior. Phillips also argues that PredictIt is educational, because it inspires people to pay closer attention to politics — kind of like how people who bet on football games consume much more football than the average person.
Caleb Davies, a trader from Minneapolis, consumes more politics than the average person. During this month’s topsy-turvy race for speaker of the House, in which millions of PredictIt shares changed hands before Rep. Kevin McCarthy finally secured the job, Davies says he “probably watched 40 hours of C-SPAN.”
In 2021, Davies took it a step further. Before the Senate held its vote on Miguel Cardona’s confirmation to become the Education secretary, Davies spent called around to Senate offices to try to figure out what the exact tally would be. Armed with “inside information,” he bet big — $1,200 — only to be foiled when Sen. Jerry Moran of Kansas never cast a vote.
When Brumm, the Phoenix trader, was betting on California Gov. Gavin Newsom’s recall election in 2020, he did more than just obsess over the news or work the phones. He says he and a friend drove from Arizona to three California counties to conduct “in-person polling” on the issue. It wasn’t exactly a scientific survey, but in any case Brumm predicted Newsom’s win within about one percent, and ended up winning more than $10,000.
Some bets required a lot less leg work. After it had become clear to all but the most die-hard Trump supporters that Joe Biden had won the 2020 election, PredictIt left its market open while Trump fought the results. Deciding when to close a market in an era of contested elections was sometimes a contentious call for the PredictIt folks (“We got a couple bomb threats,” Phillips said). With enough Trump true-believers willing to put money on their guy eventually being declared the winner of states that clearheaded observers knew he had lost, PredictIt users could bet on an outcome that was more or less a sure thing. The returns were small, but the risks were nearly zero.
“It was basically like free money,” said Davies who had somewhere around $60,000 invested in PredictIt at the time. “You could throw $1,000 on your credit card and get like $200, plus the credit card points.”
There are concerns that gambling on politics only exacerbates the gamification of an American political system that already feels too much like a reality show. Dennis Kelleher, of the nonprofit Better Markets, said that allowing gambling on elections could encourage the corruption of democracy. In Washington, home to many of PredictIt’s “super forecasters,” political gambling is a particularly fraught subject. People who work in politics may be privy to inside information (about how Senator’s plan to vote on a bill, or what the nonpublic polling says about a candidate’s chances of winning). Sean McElwee, the former head of the progressive polling firm and think tank Data for Progress, has long been an active user of PredictIt and even encouraged his staff to place their own wagers. He believed that having “skin in the game” was a good way to keep pollsters and other political practitioners accountable to their predictions.
“Having a definitive log — backed up by money, of things you were correct and incorrect about — is both a humbling and rewarding thing,” McElwee said, noting that it helps him “calibrate” which of his political instincts he was right about. (After the 2022 midterms the Data for Progress senior staff ousted McElwee, who had not been shy about discussing his betting, in part for the perception that he had been making wagers based on the organization’s polling.)
Phillips believes that even if the CFTC shuts down PredictIt, gambling on politics is here to stay. Clearly there’s interest: Kalshi, a start-up that has received $30 million from venture capitalists, has recently applied with the CFTC for permission to launch their own political markets. The CFTC may reject the Kalshi bid, but desperate gamblers will always have the less-than-legal options like Polymarket, an offshore crypto exchange that technically requires users to be outside of the United States to place bets.
Still, the possible death of PredictIt was devastating news for people like Pipkin who hope to continue making a living off the political markets.
“I’ll be limping along, pretty wounded,” he says. He says he thinks he can find ways to cobble together a living with websites other than PredictIt, but he’s not entirely sure. And if he can’t do, he can always teach.
“It was the path I was heading before,” said the former post-doc researcher. “But I do this now because I enjoy it.”