The Art of the Pump.

• Date: 01 April 2022
• Author: Golden, Brian

PREDICTION MARKETS ARE FILLED WITH PREDATORS AND FAKE NEWS. BUT THEYRE THE ONE PLACE IN POLITICS WHERE NOTHING IS MORE VALUABLE THAN THE TRUTH.

For many Americans, January 6, 2021--the day when insurrectionists stormed the U.S. Capitol, the first breach on the sentinel of our democracy in centuries--is a troubling, trembling memory. But for a 30-year-old "political futures" trader from outside Philadelphia who goes by the online moniker "Zubbybadger," it is that, and something else, too. For Zubby, January 6 was the day his bank account went boom.

Early that morning, Zubby (who, like all the traders I interviewed for this story, requested anonymity due to the varying opinions of gambling held by their families and employers--present and future) logged into PredictIt, an online political futures market where users trade shares on potential results of political events--say, which candidate will win an upcoming election, or who will be an executive branch appointee. The Senate was scheduled to certify Joe Biden's presidential victory, and PredictIt had created markets on which Republicans would sign official certificates of objection.

Unlike the stock market, where shares buy ownership in a company, shares on PredictIt are priced toward the likelihood of a given outcome occurring. In August 2020, for example, traders who believed that Kamala Harris would be tapped as Biden's vice presidential nominee could buy her shares for around 40 cents--from other traders who were willing to pay 60 cents that Biden would choose someone else. When Biden picked Harris, every share of Harris was worth a full dollar while shares of also-rans like Susan Rice and Gretchen Whitmer were worth nothing.

Zubby had grown his initial deposit of $100 up to several thousand via some savvy election forecasting as January 6 approached. "People weren't paying it much thought," Zubby says. "But Trump was leaning hard on those senators. It seemed obvious this was gonna be a loyalty test." Missouri Senator Josh Hawley had already committed to object, and Zubby reasoned that there was no way Ted Cruz would let Hawley out-bootlick him, so Zubby grabbed a bunch of Cruz "Yes" in the 30s. Ron Johnson: Buy. Tommy Tuberville: Buy. More than seven "Republicans to Object": Buy. Buy. Buy. "As it got closer and closer, you could just feel it coming," Zubby says. "It was going to be a reckoning." He might not have guessed that insurrectionists would breach the Capitol, but Zubby's instinct for what the day would mean was dead on. On the day democracy nearly died, Zubbybadger made more than $3,000.

His account now flush with cash, Zubby expanded his operation. He began watching Senate committee meetings on C-SPAN, taking stock of how forcefully legislators questioned Biden's nominees, then cashing in, time after time, by accurately guessing how many votes the nominees would receive for confirmation by combining a prodigious capacity for recall with a discerning eye for detail.

At committee meetings, nameplates were too tiny to read on the C-SPAN pop-out he left open while toiling through his work-from-home pharma internship, so Zubby committed to memory not only who served on each committee, but also where they usually sat, so if he saw an empty chair he'd know which senator wasn't showing up to vote that day. The diligence paid off in May 2021, when the Senate was planning to vote on the creation of a January 6 commission. He hadn't spotted Arizona Senator Kyrsten Sinema in any of the live feeds he tracked religiously, and she'd missed three votes the previous day. He DMed Punchbowl News' John Bresnahan, a venerable Hill reporter known to communicate with traders. Bresnahan assured him that every Democrat would be there to vote for the bill, but Zubby stuck with his gut--and his eyes. When Sinema ultimately no-showed (along with Washington's Patty Murray and nine Republicans), it sparked liberal rage headlines. But Zubby had seen it coming, and he was $2,000 richer for it. That bet--won with the same sharp instincts and keen intuition that power good reporters--was just one small chunk of the more than $150,000 he's made on PredictIt since his first deposit in 2020.

PredictIt, it must be said, is a strange place--an eclectic virtual clubhouse teeming with cliques and crazies, conspiracy theories and camaraderie. But amid the madness, a powerful force is at work. Here, those with a sixth sense for distinguishing news from noise get paid. Here, in a game where information is money, expertise is measured not with blue checkmarks or column inches, but in cash. PredictIt and its industry peers call themselves prediction markets, but they are actually something far more important: perhaps the one final place in our smoke-and-mirrors political world, bursting at the seams with bluster and bullshit, where nothing is more valuable than the truth.

That there is a completely legal place to make these wagers at all surprises even some whose livelihood depends on being tapped into all things political. But legal it is. In 2014, PredictIt obtained a no-action letter from the Commodity Futures Trading Commission (CFTC), with the federal agency explicitly granting the company--which is...