Monday, May 14, 2018

Online Bettors Don't Give Eric Greitens Much Chance of Staying Governor

Posted By on Mon, May 14, 2018 at 12:05 PM

click to enlarge DANNY WICENTOWSKI
  • DANNY WICENTOWSKI
Update, May 15:

Hours after this story was published on Monday, St. Louis Circuit Attorney Kim Gardner shocked pretty much everyone by announcing that her office was dropping the felony invasion of privacy charge against Governor Eric Greitens. Bettors on PredicitIt also took note.

Following the news, the price/probability of Greitens surviving 2018 as governor shot up — way up, topping 50 cents at one point, indicating that some traders viewed the governor's chances at sticking around were better than that of his demise.

But in a matter of hours the price cratered, falling back to 26 cents. Perhaps the bettors realized that Greitens is far from safe, as Gardner has vowed to refile the charges with a special prosecutor. Greitens is also facing an impeachment-happy legislature and a separate possible felony for computer tampering related to a campaign donor list.

click to enlarge DATA VIA PREDICTIT
  • Data via PredictIt
End of update. Our original story continues below:

As Missouri Governor Eric Greitens goes on trial this week, the question of whether he'll survive 2018 as governor has been driving bettors to PredictIt, an online market that allows users to buy, sell and trade shares on political questions.

Site data suggests that PredictIt's users haven't taken a very friendly view of the governor's chances. The so-called "contract" for the question, "Will Eric Greitens be governor of Missouri at year-end?" currently sits at 27 cents per "yes" share, indicating that PredictIt's users only give Greitens a 27 percent chance of keeping his job.

PredictIt works by setting up contracts that represent bets with specific yes-or-no outcomes. The site's aim is to turn this betting market into usable data — it's a combination of small-stakes gambling and academic project — and so it converts an event's probability from a percent into cents.

For every trader who buys a "yes," there's another trader holding a "no." If a given event does happen, the "yes" shares are worth $1 — the equivalent of 100 percent, or certainty — while "no" shares become worthless. If a given event doesn't happen, the "no" shares are awarded the $1 value.

That may sound complicated, but what matters here is that it can be a good way to gauge public opinion in an age where polling is increasingly imperfect. While some users have made thousands by buying and selling shares on Trump's tweeting habits, the platform's data is considered a goldmine for political analysts. During the 2016 presidential election, some argued that PredictIt's betting market was a more accurate reflection than traditional polls.

Obviously, measuring public sentiment in a national election is a far different proposition than Greitens' gubernatorial future. Outside of a possible jury (which Greitens' lawyers would like to see replaced with a determination by a single judge), the public isn't going to vote on this issue.

But in trying to measure public opinion following the twists and turns of Greitens' case, PredictIt's data is pretty interesting.

Initially, the market was unsure of the outcome. In the weeks after the contract was first posted in late February — just after Greitens was indicted for felony invasion of privacy — the "yes" shares for those believing Greitens would remain governor at the end of 2018 hit prices as high as 55 cents.

click to enlarge DATA VIA PREDICTIT

But things changed drastically April 11 with release of a report from the Missouri House Special Investigative Committee on Oversight, which detailed allegations that Greitens had forced a St. Louis hairdresser into a non-consensual encounter in his basement where he allegedly struck her, taped her to a pull-up bar and took a nude photo against her will.

More than 2,000 shares were traded that day, the highest volume recorded on the Greitens contract. On that day, the price fell to a low of six cents, indicating that traders saw only a six percent chance that 2018 would end with Greitens as Missouri governor.

Since then, however, as Greitens has continued to wage a public relations campaign against prosecutors and Missouri legislators, the price has climbed to the 20- and 30-cent range. Still, it plunged again early this month after lawmakers set the date for a special session to determine whether Greitens should be impeached.

It's worth noting that at 5,898 shares and around 14,000 trades, the Greitens saga has attracted a relatively modest level of PredictIt users' attention. By comparison, the contract for "Will Scott Pruitt be EPA Administrator at end of day June 30?" boasts more than 50,000 shares and more than 200,000 trades. That by definition may affect the accuracy of its ability to gauge public sentiment.

It's also worth pointing out that the prices have remained essentially flat in the last week, even as potential jurors are being questioned. Perhaps the bettors are taking a wait-and-see approach, considering the trial is shaping up to be a contentious affair pitting Greitens' high-powered lawyers against an embattled city prosecutor.

Whatever happens to Greitens, PredictIt provides a glimpse at how savvy political bettors are viewing the drama. It also means that lawyers won't be the only folks making money off this circus.

Follow Danny Wicentowski on Twitter at @D_Towski. E-mail the author at Danny.Wicentowski@RiverfrontTimes.com

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