BY DAN ALBAN
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Many law students pride themselves on having a firm grasp on reality and a keen understanding of how the world really works. But can we predict the outcome of social events using our keen understanding of the law, coupled with knowledge of political science, economics, and other relevant fields? Or are we as clueless as everyone else? The only way for you to know for sure is to put your money where your mouth is. How?
By placing wagers in online sportsbooks and trading shares in online betting/trading exchanges, of course. Online sportsbooks such as sportsbook.com allow members to place bets in much the same manner as a traditional Vegas sportsbooks, while online futures markets such as TradeSports.com serve as a broker between members who offer and accept each other’s trades or bets. But online gambling isn’t just about predicting that the Patriots will cover a 14-point spread or calling pre-flop bluffs on PartyPoker. While online sports betting and poker still make up the vast majority of online wagering, wagers on non-traditional subjects – political events, entertainment awards, the outcomes of legal cases, and even the durations of celebrity marriages – are gaining momentum.
Exotic futures and proposition bets are by no means new. Perhaps the most famous such bet from history was Cleopatra’s bet with Mark Antony that she could spend ten million sesterces on dinner – a bet she allegedly won by dissolving expensive pearls in her wine and drinking the mixture. World Series of Poker champion “Amarillo Slim” Preston is legendary for winning bizarre proposition bets on everything from a game of dominoes with Willy Nelson to playing golf with a hammer against Evel Knievel. Upping the ante, high stakes gambler Brian Zembic won $100,000 on a wager that he would get breast implants and keep them for a year. Zembic not only won the cash, he also kept his 38Cs afterwards because they helped him pick up women.
But the inspiration for the current popularity of wagering on non-sports futures might be traced to the 1980 wager between free-market economist Julian Simon and Malthusian doomsayer Paul Ehrlich. In an effort to highlight Ehrlich’s failed predictions of mass starvation and other symptoms of overpopulation, Simon challenged Ehrlich to put up or shut up on the issue of resource scarcity. Ehrlich could pick any raw materials that he thought would increase in inflation-adjusted value over any period of more than a year, and Simon would bet their value would decrease. Ehrlich picked five metals – chromium, copper, nickel, tin, and tungsten – and the ten-year period of 1980-1990, with each man wagering $1,000.
By 1990, the value of all five metals had decreased – three of them outright, and two when adjusted for inflation. Tin and Tungsten had fallen by more than half when adjusted for inflation. Simon had won the bet handily and Ehrlich paid up but didn’t shut up, claiming that the wager had been a fluke. When Simon offered a follow-up wager for $20,000, Ehrlich refused but still maintained that resources were becoming increasingly scarce. Despite the resounding failure of his predictions of catastrophic overpopulation, Ehrlich won a McArthur “Genius” Award in 1990 for promoting “greater public understanding of environmental problems.”
Today’s exotic futures bets usually aren’t quite so politically charged, but they may still be about political events. Last fall, many online sportsbooks offered odds on the presidential election, and also offered odds on Supreme Court nominees this past summer. One can currently place bets on the outcome of the 2008 presidential election (Republicans are slight favorites on most books), who will win the Democratic presidential nomination (Hilary Clinton is a strong favorite), and who will win the Republican presidential nomination (no clear favorite, but John McCain, Rudy Giuliani and George Allen are early frontrunners). A handful of online sportsbooks even offered odds on who would be selected as the new pope last spring.
Outside of the political arena, many sportsbooks and trading sites offer odds on the winners of entertainment awards shows such as the Oscars, Emmy’s, and Grammy’s. In addition, sportsbook.com frequently offers odds on the outcome of reality shows such as The Apprentice and Survivor (Stephenie, Gary and Brooke are the early leaders in Survivor Guatemala, each with 5-1 odds.)
BetCris.com offers odds on what Bush will do after his presidential term ends (35-1 payout if he becomes a spokesman for Viagra/Cialis), how the Supreme Court will rule in Anna-Nicole Smith’s case, and what will happen next in the marriage of Demi Moore and Ashton Kutcher (strangely, the odds are even that they will announce the marriage is only a Punk’d prank).
Pinnacle, known for offering some of the most generous odds, also offers odds on a generous variety of exotic futures, including the outcome of the world chess championship, the 3rd quarter median housing prices in several dozen localities, and even whether it will snow in London on Christmas (currently about 6-1 against).
TradeSports offers trading on a staggering array of political, legal and current events futures, including who will be the next chairman of the Federal Reserve, whether the Iraqi constitution will be ratified by October 31, if/when taxpayers will be able to transfer social security taxes to private accounts, and whether the Defense Department will announce the closure of Gitmo before the end of the year.
Eager to step up, but not so eager to risk your meager student loan funds? There are a few non-monetary information markets where you gamble nothing more than your reputation as a soothsayer. Hollywood Stock Exchange, or HSX, allows you to trade in the futures of movies and moviestars, and correctly predicted 8 of 8 top categories in last year’s Oscars. Foresight Exchange, or FX, offers trading on a mindboggling variety of futures trades, with a special emphasis on science-related claims.
Dan Alban is a 3L who has bet a future week’s salary against a friend that modest commercial space flight will happen by 2024.