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 sanctioned by Victoria University of Wellington in New Zealand—a license to operate in the U.S. In its request to the agency, PredictIt proffered the creation of a “small-scale, not-for-profit market” for “educational purposes,” which would then be managed by a D.C.-based data and technology company called Aristotle. The most risk a trader could take on in a single holding would be $850, and markets were capped at 5,000 active traders per individual market—limits that, to the chagrin of many players, have remained fixed throughout PredictIt’s history.
Beyond giving sharps like Zubby a vehicle by which to upgrade his beat-up Honda to a new ride (2021 Nissan Rogue, new, gunmetal gray), futures markets offer signals to interested parties on, at the very least, conventional wisdom regarding short- and long-term political outcomes. An investor might consider the market price on the likelihood of tax reform passing, for instance, and use it to hedge a financial asset, the same way a farmer might trade corn futures to protect an investment in this year’s crop. When prediction markets work, they are Exhibit A of the thesis put forth by James Surowiecki in the field’s ur-text, 2004’s The Wisdom of Crowds, that groups of forecasters acting independently of one another are quite likely to make guesses closer than the wide majority of the individual predictors.
In addition, PredictIt offers its aggregate data free of charge to universities and research entities for studies on market behavior. This academic utility is the linchpin in PredictIt’s legal status, and a descendant of the website’s progenitor, the Iowa Electronic Market. Founded in 1988 and administered by the University of Iowa’s Tippie College of Business, the IEM runs today with lower limits, smaller trading caps, and fewer markets than PredictIt, but its conceptual framework provided the model for PredictIt’s no-action request.
Skeptics of PredictIt—and there are more than a few within the forecasting community—are careful to note some key differences between it and the IEM. To them, the exorbitant trading fees (10 percent on every profitable exchange) and surfeit of markets (150-plus at any given time, with widely varying levels of public relevance), along with its association with a university more than 8,000 miles from American shores, make the company’s practices seem oriented a bit more toward revenue generation than its legal nonprofit status would imply. The CFTC, for its part, doesn’t seem to find PredictIt’s business model objectionable—or, at least, there doesn’t seem to be a discernible appetite within the agency to dial up the regulatory temperature. In its eight years with a pseudo-monopoly on this weird corner of the gambling, er, investing ecosystem, PredictIt has grown a user base it claims holds steady at 30,000 total active traders but peaks to more than 100,000 trading accounts in election years.
Recently, a new competitor joined the scene that could threaten PredictIt’s stranglehold on the market. In late 2020, Kalshi, a for-profit futures market with vastly higher limits ($25,000 per market) earned the CFTC’s blessing to commence full U.S. operations. Kalshi markets don’t touch elections—yet—but they do offer a dizzying array of political-adjacent markets, everything from interest rates and weekly jobless claims to the number of new COVID-19 cases each day and water levels on Lake Mead. Kalshi doesn’t yet have the user base to match PredictIt, but it would surprise exactly no one if, in a few years, it did.
What both sites have to negotiate is a critique that concerns every market—the one about “insider trading,” a concept with quite different implications here than on Wall Street, where it is, of course, strictly forbidden and never, ever, ever practiced. On the one hand, a campaign operative trading on information from their client could be both unfair and unethical, particularly if they can influence the outcome. But on the other, the potential presence of “insiders” undoubtedly makes the market more accurate.
In May, for example, the price on Liz Cheney getting replaced as chair of the House Republican Conference shot up in price on high-volume trading in the 20 minutes before news broke that House Minority Leader Kevin McCarthy would hold a vote on her fate. Clearly, someone knew something that wasn’t yet public and was profiting from it. This is what an economist might call “price discovery”—the idea that by allowing anyone, even so-called insiders, to place money on the chance of an outcome occurring, a prediction market’s prices can get closer to reflecting the true likelihood of that thing actually happening. In other words, for the market to provide a legitimate public service, you really do want anyone who knows anything about Joe Manchin’s potential vote on Build Back Better to be putting money behind that knowledge in the market. On the other hand, the public significance of the things people bet on could make the participation of insiders, beyond being unfair, incredibly poisonous. While Kalshi bans users from trading on “material, non-public information,” PredictIt has no such restriction.
Whatever “insiders” might lurk in the shadows of PredictIt markets, they certainly aren’t plentiful enough to sap the value sharps can find there. And very few find more value on PredictIt—or anywhere—trading on the outcomes of elections than a 23-year-old forecasting savant who goes by the handle Iabvek.
Since January 2021, Iabvek—in real life, a Catholic conservative from Arizona—has made, by his own account (one I partially verified with public sources), $200,000 trading political futures. On election nights, he breaks down to-the-minute vote totals in a Zoom war room with his thinking partner, SharkoRubio, a 20-year-old from New Zealand who was trading political futures on his dad’s account before he could drive. With a combination of data modeling and qualitative analysis, the two make a killer team, and despite their youth—or, perhaps, in part, because of it—they’ve achieved minor celebrity status in the forecasting scene thanks to a run of jaw-droppingly accurate predictions that began, ironically, in an election that was already over: the race to become New York City’s next mayor.
After Big Apple voters cast ballots on June 22, Brooklyn Borough President Eric Adams had what appeared to be a commanding lead. He’d earned about 32 percent of first-place votes, far above second-place Maya Wiley, who had just 22 percent. But there was a catch. New York uses a ranked-choice voting system where voters mark ballots not just with their first choice, but with their second- through fifth-place choices as well—results of which would be made public seven days after election night. With Adams having a seemingly insurmountable lead, the mainstream political press was ready to coronate him. The day after the voting, the Cook Political Report senior editor Dave Wasserman tweeted to his more than half a million followers that Adams had a 95 percent chance to win. He was right, as it turned out, but Iabvek and Sharko saw an additional—and monetizable—
“The narrative on election night was that Adams had succeeded based on his strength with Black voters,” Iabvek says, “but when we took apart the data, we found that was only half the story.” When Iabvek talks about elections—and he loves to talk about elections—he does so with furious velocity and the slight twinge of annoyance that his mouth will never quite keep up with his brain. “The problem was that polls predicted Black turnout at 33 percent, but our analysis of precinct-level data showed it was actually only about 28 percent. And when we saw that, and how poorly Adams had done with almost every other demographic, we knew once they started counting second choices he might be in trouble.”
Though Adams appeared the likely winner, the press and the candidates alike acknowledged that the race was far from over and would likely remain uncalled until mid-July. Knowing this, Iabvek and Sharko began slowly—so as not to spook the market into taking a closer look—accumulating shares of Kathryn Garcia, the NYC sanitation commissioner, who was lurking in a distant third and holding a measly market price of 10 cents per share. Their hypothesis was that Adams’s lead in first-choice votes masked a weak showing in the lower preferences, where they expected Garcia to shine, thanks to broader demographic appeal and a late-stage alliance with also-ran candidate Andrew Yang. Within a few days, Iabvek had accumulated about 200,000 shares of Garcia—at a cost of nearly $20,000. Then, he waited.
“When I get nervous, I sleep. So when the numbers were scheduled to come out, I took a nap,” Iabvek says. “I really wasn’t sure what I was going to see when I woke up.”
What he saw on his PredictIt dashboard were a whole lot of green arrows. And when the NYC Board of Elections released the reallocations, what the political world saw in Technicolor was what Iabvek and Sharko had discerned through the fog. Adams now led Garcia by a mere 2 percent, putting her well within striking distance once absentee ballots, which were likely to favor her, were included. Within minutes of the announcement, Garcia’s price on PredictIt surged to 65 cents, and the value of Iabvek’s shares had risen by more than $60,000. Thinking the price fair—with Garcia favored, but no shoo-in—Iabvek sold most of his stockpile and booked a huge win.
But then, something else happened. On July 2, as New York awaited the final tally of absentee ballots that would determine the race, the New York Times reporter Emma Fitzsimmons offhandedly mentioned in a story an incomplete vote tally from an unnamed subset of Manhattan. Within minutes of reading the story, Iabvek was digging through the Board of Elections website in hopes of deducing which districts the ballots might be from. He soon arrived at another startling conclusion: Garcia wasn’t getting near the absentee support she’d need to take the lead.
The tally fooled even some of the biggest names on elections Twitter. In referencing the vote totals in Fitzsimmons’s story, Cook Report’s Wasserman tweeted that the numbers were “likely a bit above the absentee clip Garcia would need” to win the race. But Iabvek was sure. He flipped his original position, buying tens of thousands of shares of Adams to win, after all. He was right again. Four days later, the final count delivered Adams—and Iabvek—a victory. The former beat cop was on track to run the nation’s largest city. The philosophy major from Arizona who has never had a boss had won $90,000.
Dave Wasserman and the other pundits who erred on the New York mayoral race aren’t dummies—they missed one, it happens. And plenty of traders had made the same mistake. Besides, Iabvek’s track record isn’t flawless, either. He boldly and quite publicly assumed that the upstart India Walton was easily going to win the Buffalo mayor race after defeating incumbent Byron Brown in the Democratic primary. She lost the general election by nearly 20 percent. The error cost Iabvek $8,000. It’s just that when Iabvek makes a prediction, the stakes are different.
“People who write about elections for a living, they may be smart or maybe not, maybe they just really enjoy talking about politics, or add some other kind of value to the public’s understanding of the process,” Iabvek says. “But they don’t have the same financial incentive to be right as someone like me.”
Iabvek’s success is coated in a delicious irony. He feels frustrated—downright hostile, if we’re being honest—toward a political/media ecosystem he believes relies too much on flimsy narratives and dubious polling to draw spurious conclusions, one moment finding certainty where none exists, the next fumbling for answers while clarifying data lurks in plain sight. And yet, it is precisely these analytical sins—committed by talking heads, tweeters, and his fellow traders—that allow Iabvek to jump a couple of tax brackets with the click of a button.
That skepticism sent Iabvek on a road trip to California’s Orange and Imperial Counties to do his own polling on the California recall, with polls suggesting lackluster support for Governor Gavin Newsom’s attempt to beat a recall election. With a fellow trader, Iabvek conducted 130 in-person interviews at doors from Spanish-only porches in Calexico to posh zip codes in the OC. Not a single person who had backed Biden in November was voting to recall Newsom, and almost no one knew anyone who was planning to. Convinced of inaccuracy in official polling, Iabvek tweeted that Newsom would win by 26.5 percent of the vote, rather than the 15.8 percent that Five-ThirtyEight’s polling average—a consolidation of publicly recognized expertise—predicted. He accumulated shares accordingly, and when Newsom beat the recall by 24 percent, Iabvek’s wallet was $16,000 fatter.
It’s hardly an original observation to note that American politics is a debilitating, gruesome hellscape. For four long years, our president was a lying liar who lied about absolutely everything. He lied about having a killer disease, pretty patently tried to infect his 77-year-old opponent with that disease, and when he lost an election to that opponent, convinced his acolytes of a Big Lie, that the election had been stolen, its results fraudulent.
Liberals have plenty of their own lies, though less overtly cancerous—grifters who amass armies of followers with tales of pee-pee tapes and kompromat; or rake huge salaries by separating you from your money promising that Amy McGrath really, truly can win in Kentucky, or that if we hold enough signs outside Joe Manchin’s boat, he will thoughtfully reconsider his position on the filibuster.
Has it always been this bad? Burr killed Hamilton, sure. But at least the bullet told the truth.
To say that prediction markets reward truth is not to say they are immune from the poisonous political world they exist to reflect. The comments under any PredictIt market demonstrate this reality. (Kalshi, for better or worse, has no comment sections.) PredictIt is, by its own admission, a male-dominated space, and the same casual racism, sexism, homophobia, obnoxiousness, juvenile idiocy, and outright irredeemable batshit nonsense exists here that subsumes many online spaces. (A debate over whether “Hillary Clinton” is actually a cyborg who took the place of the real Hillary Clinton after she died of COVID-19, a virus she may or may not have played a central role in creating, remains a favorite.) The site has recently stepped up its efforts to police its comment sections, but relies mostly on a report-and-sanction model. As in many online spaces, the racist, lunatic fire just burns too hot for it to be completely put out.
Of course, dumb beliefs, in a market where you actually have to be right, lead to betting markets that sharps can easily profit from. For weeks after the 2020 election—undoubtedly fueled by what traders call “MAGA Money”—the price of Trump prevailing in Pennsylvania and Georgia, and even states like Minnesota where Republicans were making no pretense that he’d actually won, persisted in the teens despite all evidence to the contrary. The difference between them and the MAGA-heads on OAN or Newsmax, however, is that being wrong loses money. If Tucker Carlson were on PredictIt, he wouldn’t be raking in eight figures—he’d be bankrupt.
The scarcity—and value—of good information creates another, less nefarious purpose for each market’s comment board, serving as a place to glean nuggets of intel from fellow traders. Here, traders swap tips and theories, posting tweets of potentially valuable news. But often—too often, some would argue—posters do so with a certain intent: to influence traders toward a certain position, so as to unload shares they’d like to sell, or in the hopes of making the ones they want to buy get cheaper. This is called a “pump.”
Pumping is, depending who you ask, shady, hilarious, annoying, potentially criminal, or something of an art form. A pump puffs up a certain commodity with the intent of boosting demand for it, raising the price buyers are willing to pay, and allowing the holder to exit a position with a profit. A pump might be false information, or might be a half-truth, real facts shared with gusto and no context, under the guise of “help.” An effective pump entices with details that seem too mundane to be fiction.
Last winter, as Education Secretary Miguel Cardona awaited his swearing-in—and the March 1 deadline for the related market loomed—a couple of traders posted announcements from the Twitter accounts @whschedule and @whpoolreport saying Cardona would likely be officially sworn in the night before the deadline, instead of the day after, as most had assumed. The market flipped after the then-notorious pumper AIBets posted a screenshot of the official-looking missive in Disqus along with a taunt: “Thanks for the cheap YES.” Not long after, the well-known white hat Domer, a longtime trading pro from the West Coast, equal parts respected and feared by other traders, posted that the Twitter handles were fake. PredictIt traders hadn’t been the only ones fooled. Months later, Politico reported that the same Twitter account had, on at least four occasions, snuck questions into virtual White House press briefings and had them answered by very real Press Secretary Jen Psaki. In D.C., it took weeks before anyone sniffed out the ruse. On PredictIt, it took Domer about 10 minutes.
Domer has an undeniable nose, and not just for spotting a pump. The guy’s made more than a million bucks as a trader. And when he smells what’s going on, he can profit from it, too—by realizing what’s happening and then grabbing the right shares at a bargain price he had nothing to do with setting. But that doesn’t mean he likes it.
“It undermines the ecosystem, and the victims are inevitably newbies,” Domer says. “It’s hard enough to do well without being bombarded by people trying to rip you off at the same time.”
He’s referencing comments on a message board, but Domer might as well be talking about the entire sorry state of American political discourse today. After all, isn’t it all just one big pump? Zubbybadger knew that Donald Trump was pumping Republican voters on a stolen election and voodoo Dominion machine conspiracies, and that plenty of GOP senators would have no choice but to join the pump too, if they wanted the value of their positions to rise. Iabvek looked under the hood in California and found a public getting pumped—unintentionally though it may have been—by polls that weren’t capturing reality, and by pundits who got more clicks selling a barnburner than selling a blowout. Comment section junkie diehards talk up crap shares, then flip them for pennies to noobs suckered at the offer of a deal too good to be true. Candidates gin up votes promising the world, fail to deliver the undeliverable, then shrug their way to a more profitable life on K Street. The truth will set you free, but in either arena, a lie can still get you paid.
Maybe PredictIt and the futures markets like it aren’t so different from the brick-and-mortar political world after all. At any rate, Zubby, Iabvek, and Domer should, perhaps, give us some small comfort. Even in the face of a good pump, the best are still awfully hard to fool.