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Political junkies, traders and "emotional hedgers" interested in election-night betting action gathered at a presidential debate party on Tuesday night hosted by U.S.-based prediction market PredictIt in Washington D.C. to celebrate and commiserate over what was expected to be clear Clinton victory and ended up as a nail-biter between Democrat Hillary Clinton and Republican Donald Trump.
An informal poll of party-goers suggested that bettors were surprised with Trump's early strong performance. And, the PredictIt market, which allows investors to bet on the election outcome, shifted from expecting a Clinton victory to one with Trump as the next president.
One bettor, watching the television set despondently, said he stood to lose $2,000 because he bet on Clinton winning the presidency. "It looks like it's going to be a Republican sweep," he said.
Another bettor, Jake Lowery, a senior investigator at the Labor Department, said he bet $20 that Trump would win in an attempt to offset the "despair" of a possible Clinton loss. He called it an "emotional hedge."
"Should Trump win they will pay out a dollar on each stock so I'll make $75," Lowery said, sporting a Hillary Clinton button. "It would help dampen the feeling of despair. If I was really serious I would put $100 in so at least there would be something I could do with it. But $20 was for fun."
Lowery said he got the idea from a phenomenon where speculators bet against their favorite team in a really big game to help "drown the sorrows" if their team loses. "If my favorite team losses I'm very disappointed but I win the money and it helps drown my sorrows. And if they win I could care less that I lost my $20," Lowery said.
Lowery joined over 200 participants to watch the results pour in at PredictIt's D.C. headquarters, located a short walk from the U.S. Capitol. The election night gathering is PredictIt's fourth D.C. event, after holding similar parties for presidential debates.
How does the market work? If a trader believes Republicans aren't going to maintain a Senate majority they click the buy button and accumulate shares on their side of the bet. For example, if Trader A thinks an event has at least a 60 percent chance of taking place he or she offers 60 cents for a Yes share. PredictIt matches that offer one by Trader B, who is willing to pay 40 cents for a No share. Each trader now owns a share in the market for this event on opposite sides. Once the event happens, the side that is correct gets $1 for every share.
And when early results in battleground states Florida, North Carolina and Ohio showed a promising lead for Trump and a widening path to 270 for the Republican presidential nominee the PredictIt market dramatically shifted. Early Tuesday, bettors on the Predictit market were able to pay 82 cents for a Clinton share and 20 cents for a Trump share on the question of who will win the election. By 10:30 p.m. the market had shifted significantly - bettors were paying 70 cents for a Trump share and 30 cents for Clinton.
A share backing the expectation that the GOP will keep the Senate went for 38 cents in the fleeting hours before the election while one going for Democrats taking control went for a corresponding 62 cents. By 10:30 p.m. a share backing a GOP Senate was going for 84 cents while one going for Democratic control dropped to 16 cents -- after Republicans Marco Rubio, Todd Young and Rob Portman were projected to win their Senate races in Florida, Indiana and Ohio, respectively (they eventually clinched). Democrat Tammy Duckworth was projected to win her race in Illinois (which she eventually won), scoring the first Senate seat flip of the night.
Participants drank aptly named cocktails, including "Hillary's Blood, Sweat and Tears" (Blood orange juice, lime juice, tequila, simple syrup) and "Buy Low, Sell High" (Lime juice, mint leaves Bacardi Limon sugar, club soda, crème de menthe and lime). No Trump related drinks were available (Trumptinis, a popular vodka martini concoction, were available at a previous event).
Beyond gambling, traders and other debate-experience-seekers lined up to take snapshots next to life-size photo cutouts of Clinton or Trump in a photobooth set up for the event.
The crowd appeared to be made up mostly of Clinton supporters, many bearing Hillary buttons and making comments suggesting that Florida can't go for Trump because Broward county, a Democrat-leaning district, hadn't been called yet. Trump supporters came equipped with "Make America Great Again" hats on their heads, but there weren't many around.
The party host, PredictIt has a number of predictable betting options beyond the most predictable: "who will win the 2016 election." (The odds on the site heavily favored Clinton in the weeks leading up to the election). These include whether the presidential election margin of victory will be more than 4-6% or 2-4% or if the GOP will keep control of the Senate. (The majority say Democrats would take the Senate). Voter turnout was another big gambling category, with the odds favoring 135-140 million voters turning out to the polls vs 140 to 145 million.