I'm a long-time poker player and recent political bettor. Gamblers routinely overestimate their edge or don't care whether they win. Often it's a mix of both.

There are still many many many people who are willing to bet on the results of the US presidential election: https://www.thedailybeast.com/gamblers-bet-big-on-trump-and-...

What do you base your political bets on?

For one-offs, picking the favorite is good enough for most players. Thy are just seeking entertainment and maybe to win a little money. For instance, in a race between two candidates priced at $0.70 and $0.30 (ranging from $0.01 to $0.99 before resolution), many players are happy to pick the favorite indicated by the market.

Of course, if those prices are accurate, then they will lose money in the long-run after fees. For players who are betting more frequently and over a longer term, it's like any other speculation: You might assess the $0.30 underdog to have a 40% chance of winning. She is still the underdog, but you profit over the long run by buying her at her too-low price. Those players are scooping that value wherever they can find it.

For major electoral events that involve a populist with a large, loyal, and misinformed fanbase, the value pretty much finds you. Both of the described groups are making lots of money because the markets are wildly mispriced.

I wonder what you base your sentiment on. I can't imagine there's much juice left in Twitter sentiment analysis.

You don’t have to be smarter than Twitter, just smarter than the crowd, who aren’t applying Twitter analysis. Take the above article as an extreme but not exceptional case: The correct price for Biden winning the election was $0.99 for weeks before the market was closed, but he was trading much lower over that time.

We were betting on the results of an event that already happened. No Twitter analysis necessary.

I need to find more of those.

A recent example. Even after it became apparent that Biden won the election you could still sell 10:1 bets on Trump to win, on betfair, to suckers which refused to accept reality or vastly overestimated the probability for Trump to sabotage the elections and/or stage a coup.

It's basically free money.

Consider the case of betting with a traditional bookmaker. The bookmaker lays (bets against) an outcome. You back (bet for) the outcome. Each party is betting against the other.

The don't. They place bets. If they place bets on the opposite odds that you do on the same bet, then they play against you (and you're competing for that).

for fun