Looking for a 39% Return? Bet on Trump to Win GOP Nomination. – Barron’s

With Donald Trump dominating the Republican primary polls, the former president seems on a glide path toward the 2024 GOP presidential nomination. Sure, he’s been criminally indicted four times, but to many political observers, his nomination feels inevitable, inexorable, unavoidable. 

If you believe Trump has the nomination wrapped up, then a 39% return on investment is there for the taking. No, you won’t get rich betting on PredictIt.org, the political-futures website run by Victoria University in New Zealand, but you can find attractive returns and a little excitement if you’re willing to accept some risk.

I should know. I get lured in every time a presidential election nears. More on that later. 

Back to Trump. A Wall Street Journal poll earlier this month found the former president getting support from 59% of Republican primary voters, giving him a 46-point lead over his nearest rival, Florida Gov. Ron DeSantis. 

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No other candidate cracked double digits. Former U.N. Ambassador Nikki Haley was third at 8%, followed by biotech entrepreneur Vivek Ramaswamy at 5%, former New Jersey Gov. Chris Christie at 3%, and both former Vice President Mike Pence and Sen. Tim Scott of South Carolina at 2%.

If the polls prove correct, then the 39% return for betting on Trump would look like a steal next summer. So, how does it work?

On PredictIt.org, gamblers trade shares in specific political outcomes, such as the winner of the GOP primary, ranging in price from a penny to 99 cents, with a maximum bet of $850 on any single outcome. 

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When the outcome is decided, shares of the correct outcome become worth a dollar and are converted to cash, but shares of incorrect outcomes become worthless.

On Thursday night, for example, bettors could buy shares of Trump winning the GOP nomination for 66 cents, so a maximum bet of $850 would translate to 1,287 shares. If Trump were to win the nomination, that would result in an initial gain of $437.

PredictIt takes a 10% commission on profits, which would leave you with $1,243.30. The website also charges a 5% fee for withdrawing money, so if you were to bet only on Trump and then cashed out, you’d net $1,181.13, for a 39% gain.

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That’s not a bad haul, but I’m swinging for the fences instead. Before his lackluster performance in the first GOP debate, I bet on Scott to win the nomination, and if he does, I’d withdraw $9,311.33, a handsome profit on an $850 bet. 

Full disclosure: I’ve suffered some painful losses on PredictIt. Like most political observers, I thought former Secretary of State Hillary Clinton would defeat Trump in 2016, and I lost thousands of dollars. I also bet on Christie to be Trump’s running mate, and on Sen. Cory Booker of New Jersey to be Clinton’s. 

It was a really tough year for my finances. 

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But I recouped some of my money in 2020, betting on President Joe Biden to win that election and for then-Sen. Kamala Harris of California to be his running mate. Those obviously weren’t high-payout bets, but I needed a few wins.

Last month, PredictIt notched an important victory of its own against the Commodity Futures Trading Commission, which is seeking to shut it down. 

The Fifth Circuit Court of Appeals in New Orleans ruled that a so-called no-action letter that the CFTC issued to Victoria University in 2014 is a “license” to operate, and that the CFTC’s revocation of that letter in August 2022 was a “final agency action,” making that action reviewable in court. 

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Spokeswoman Lindsey Singer said PredictIt expects that all of the betting markets it offers will settle before the issue is resolved.

“The CFTC’s attempt to shut down PredictIt has been shown to be unjustified, and we’re excited to be able to continue to offer opportunities for predictions on elections as important as those being decided in the next couple of years,” she said.

On Thursday night, Trump led the GOP nomination betting market at 65 cents, followed by DeSantis (13 cents), Ramaswamy (12 cents), Haley (10 cents), Virginia Gov. Glenn Youngkin (5 cents), and the trio of Scott, Christie, and Pence at 2 cents. 

Thirteen other people were listed at a penny, including Donald Trump Jr. 

PredictIt offers a variety of betting markets, including, of course, the 2024 general election. On Thursday night, Biden led the field at 44 cents a share, followed by Trump at 32 cents, DeSantis and California Gov. Gavin Newsom at 10 cents, Ramaswamy at 7 cents and Harris at 5 cents.

I’ve been a gambler all my life, but PredictIt always will remain the scene of my biggest missed opportunity.

On Election Day in 2016, shares predicting that Clinton would win the popular vote while losing the election were trading for just a penny, so an $850 wager would have resulted in a profit of $72,755.75.

But I thought I knew better. It still hurts thinking about it.

Politicians frequently say that the next election is the most important of our lifetimes, but for me, it will always be 2016.

Write to editors@barrons.com

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