Updated: May 15
Wow! How quickly time flies by! Over a year ago I kayaked around Florida. When I arrived back at my house in early February, we were on the cusp of the pandemic. I remember paddling down the Suwannee River when my mother called and asked, “Hey, what do you think is going to happen with this virus? You think it will get here?”
“I don’t know, I hope not,” I said, “but I think journeying in a kayak, I’m safer than anywhere else. It’s been two winters since I last caught the flu. If I don’t come across anyone, then there’s no one to catch anything from. We will see what happens...” Oh, how little did I know then how life would turn into a different kind of journey…
Home confinement, in a way, has been like paddling across the ocean. The change of pace in life was very different at first, even somewhat interesting to get used to the new unusual routine, but once the days of confinement began to merge seamlessly into one another I wondered if I was in a sort of spaceship it but without a destination, , and I wondered if I was going a little crazy. At least my spaceship is closer to a luxury cruise. I have the privilege to step outside once in a while and walk to Bill Baggs park under the shade of trees, hear the birds, and even see the odd dolphin chasing mullet around the harbor. Life isn’t so bad, for me at least…
One month, three months, six months, a year of confinement has now passed, but at last, perhaps this stationary journey may be close to its end, and maybe by summer it will be possible for me to embark on another great kayak endeavor. If the virus loosens its grip on our lives, my plan is to by June, set out from San Juan and circumnavigate Puerto Rico.
While I am sure that there will be many challenges, there is one thing that will not be an issue on this journey: Money! I have all the funds for the expedition, and I have it in spades. The circumstances of how this came about are a noteworthy side story; I got the money in an online casino.
About a week before the presidential election, I came across this website called Predictit.org. It’s a political betting platform, where you can wager on the outcome of elections and other things like political appointments, resignations and the passage of Bills. I was a bit skeptical because although political gambling is legal overseas, it’s most certainly not in the United States. However, from what I gathered, the site is indeed legitimate. Like many laws in the Code of Federal Regulations, there is a loophole. You can run a political betting house in the United States, if you do it through an accredited university, make it a research project, and add a few guard rails so compulsive gambling fools don’t lose their life savings on a single bet. Each wager works like a derivative trade. If you want to bet on the outcome of a race, you make an offer to purchase shares on the outcome (between 1 and 99 cents per share) at a certain price; if someone on the opposite side of the bet accepts the offer, then a contract is created. For example, if I offer 40 cents per share that the Democratic Candidate for president will win Michigan, the system finds someone who is willing to bet 60 cents per share that the Democratic Candidate will lose. Once the outcome is known I will have earned 1 dollar per share if I’m right or pay 40 cents if I’m wrong. Given that there are thousands of trades until the outcome is known, the market value on any contract goes up and down with the wisdom of the crowd, and I can sell the contract before expiration like an Option Call, if I see a price movement in my favor.
Some crowds, however, can be wiser than others. Dumb crowds let their opinions be swayed by their collective delusions, and the Predictit chat forums are a den of voter fraud conspiracies and rumors that make the price of certain contracts swing wildly in a few hours. And this crazy volatility is an opportunity.
I am not a good gambler, but I am a reasonably smart gambler to know that games of negative expectation are not worth playing. If you want to make money gambling, you need access to information that indicates when the expectation is in your favor. That’s why you can make money in Black Jack counting cards. If you bet more when you know the odds favor, you can come out ahead.
So, a thought came into my head; what if I compared the betting odds from Predictit with some readily available polling models like Fivethirtyeight? Could there be a wager out there where the polling model would indicate a higher probability of outcome than the betting market? Could the polling model be smarter than the collective wisdom of the crowd? I thought that was worth investigating.
I set up a spreadsheet and calculated the Expectation for each state and senate race, and compared the probability from the polling models with the cost of the bet if I lost, and payout if I won. To my surprise, there were quite a few wagers (all of them for the Democrats) with an Expectation greater than 1.2, after fees. That meant that if I spread my money on enough of these wages, the rule of large numbers would work out in my favor and I would be nearly guaranteed to make money. I picked the 20 best bets and spread $9,000 between while minimizing the correlation between different races (like making sure that I didn’t bet on the democratic candidate winning, and that the next vice president would be a woman, because those two bets are 100% correlated).
My spreadsheet projected an expected return on investment of 18%, a maximum return of 40%, and a 90% chance of at least breaking even. I thought those were good odds… so I plowed into the “investment.” A month after the election when the last betting market closed I made about $2600 profit and was on the right side of 18 of the 20 races (Yes, it was darn Florida that cost me dearly…).
I don’t like to mix politics with kayaking, but I have to thank the thousands of anonymous Republicans out there who believed enough in Donald Trump’s lies about election fraud to back their misguided conviction with their money, even after it was evident that the result would not go their way. Those fools are paying for my new Epic carbon wing paddle, a kayak shipment to San Juan, and a few hotel nights!
Sea Kayak Puerto Rico Circumnavigation