Mission146
Posted by Mission146
Dec 23, 2019

Introduction

DISCLAIMER: Any statements made in the following article are primarily for entertainment purposes and should not constitute actual gambling, “Advice,” and should not be viewed as a suggestion to gamble. If you have a gambling problem, then you should call 1-800-GAMBLER or do a Google Search for local resources that may be available to you. The writer of this article does not guarantee results and is not getting paid in any way, shape or form, other than for the writing of the article itself.

It should be time to write one final article on this particular issue and then I can finally put this baby to bed.

President Donald Trump has officially been impeached in a groundbreaking bipartisan effort to look at all of the evidence objectively. The aisles were crossed by both sides as the evidence was fully gathered and analyzed in a solemn proceeding. /sarcasm

The media dubs this event as, “Historical,” and, “Groundbreaking,” but it is neither of those things in my opinion. In fact, absent a highly unlikely removal from office by the Senate, this will become nothing more than a historical footnote, just as it is with Clinton. Aside from eventually compelling (we assume) the Senate to conduct a trial, impeachment in and of itself does exactly nothing from a practical standpoint.

What actually happened was that one count of impeachment was passed by all but three Democrats and the other count by all but two Democrats. Democratic Presidential hopeful, Tulsi Gabbard, voted, “Present.” An independent voted in favor of both counts. Three individuals from the House of Representatives did not vote at all. Not a single Republican voted in favor of either of the articles of impeachment.

WHAT HAPPENS NOW?

Theoretically, the Articles of Impeachment will eventually be presented to the Senate by officers designated by the House of Representatives to do so. The impeachment process is somewhat similar to a criminal proceeding in the sense that the articles of impeachment function as a sort of indictment and now the Senate theoretically will end up conducting an impeachment trial.

While I have my own opinions about all of this, I will try to keep them as limited as possible (only mentioned to such degree as they are relevant to the betting aspect) and let’s focus on the betting:

Impeachment Was Never Really the Question

It recently occurred to me that I’ve used the term, “Impeachment,” in most all of these titles, but that’s never been the real matter at hand. Even if we go back to what I believe is my first article on the subject.

The title includes “Impeachment,” but the betting markets mentioned had to do with removal from office. I can’t make any guarantees, but I believe that I once alluded to being a bit more uncomfortable with betting strictly related to impeachment due to the Democratic controlled House of Representatives and just the weirdness of today’s American politics, in general.

More than that, I’m not a huge fan of revisionist history, so it warrants mentioning that the Democrats have been telegraphing Impeachment for quite some time. A vocal minority (of Democrats) was calling for Impeachment as soon as he was Elected, which even included a few Congresspeople. More people still called for it even prior to the actual subject matter of the current articles...so you kind of knew it wasn’t going to take much.

In any event, the questions that I have addressed in the past have pertained to actual removal from office as well as Trump finishing his term or still being in office at the end of certain years. I know you win more frequently when you bet the favorite, but you’re profitable so far if you’ve been betting what I’ve been saying. Hell, you could sell those binaries in Trump finishes 2019 as President right now if you wanted to for $0.99, but no need to lose that extra penny as I imagine he is less than 1% likely to meet his demise by the end of the year.

REMOVAL FROM OFFICE FUTURES

The question of, “Removal from Office,” appears extremely likely to resolve in a, “No.” In addition to the fact that the Senate is majority Republican, (and it requires a two-thirds vote to impeach---67/100 votes) the Senate trial consists of only the charges and evidence that are brought forward by the House of Representatives as relates the two articles of impeachment they have adopted. In other words, new offenses (or newly discovered ones) cannot be considered, so the Senate basically knows a good deal of the information upon which it will be making its decision.

Combining those facts with the fact that the Republicans showed perfect solidarity in the House of Representatives, it is almost certain that removal from office will not take place.

A practical consideration is that the Senate trial is expected to take place next month, at the earliest, which means that President Trump would have less than a year remaining in office absent winning reelection. More than that, he will presumably be the Republican nominee for President for the 2020 Election, unless the Senate adopts a separate (majority rule) motion to disqualify him from future federal office. Of course, he would have to first be removed from office before a vote to disqualify him from future office could even take place.

Another aspect of this that I have considered is that Speaker of the House, Nancy Pelosi, has stated that she may withhold the articles of impeachment from the Senate.

After an impeachment in the House, the articles are normally sent over to the upper chamber for an impeachment trial. Yet in the latest twist, Pelosi has indicated that she may not send over articles of impeachment yet -- until she gets reassurances about the Senate process.

"We’ll make a decision... as we go along," Pelosi told reporters Wednesday, adding that "we'll see what the process will be on the Senate side."

I hadn’t previously considered it, but perhaps the Democrats never planned to present the articles to the Senate in the first place, or at least, perhaps Pelosi never planned to do so.

If the Senate clears President Trump, then he would be able to say that the Senate did not convict him and use the fact that the articles were dismissed as a talking point. However, if Pelosi does not present the articles, then Democrats can take the line that President Trump is an impeached president who is still facing a Senate trial to remove him from office.

The Constitution is also a bit vague on the timeline for all of these proceedings, so the Democrats could theoretically sit on this until after President Trump is reelected, if that indeed happens. It’s also possible that they would control a majority in the Senate at that time (though unlikely) and technically possible (though extremely improbable) that they would control a supermajority needed to impeach Trump.

Let’s see how the Predictit Markets have moved since my last article on this subject.

Proposition Last Article This Article
Impeachment Yes $0.13, No $0.87 Resolved, YES
Complete 2019 Yes $0.92, No, $0.08 Yes $0.99, No $0.01
Complete First Term Yes, $0.83, No, $0.17 Yes, $0.86, No, $0.14

What interests me is that one would think that the fact that Trump was impeached would make removal from office intuitively more likely, after all, the first step to that is complete, right?

That’s not what happened. In fact, the price on the, “Yes,” for Trump to finish his full term temporarily dropped to $0.66 in September, so I hope to hell you were following it and weren’t waiting for me to write an article about it every two days and jumped all over that, “Yes,” bet. On the same day, the price on President at the end of 2019 plummeted to $0.85 for the, “Yes.”

Why? Well, because that’s when all of this Ukraine news came out...but the bettors should know that it doesn’t matter because that news is not going to change the composition of the Senate or the fact that 67 Senators would have to vote to remove Trump from office for it to be so. In other words, the markets moved for essentially no practical or meaningful reason.

That’s also why I am hoping this can be the final article about this for this election cycle. I’m afraid the divisiveness in this country that seems to pervade every form of social media and news outlets, as well as the current iteration of Masterpiece Theatre: Politics Edition has me exhausted, irritated and profoundly bored.

Additionally, after the Impeachment result was known, the market on Trump to remain in office (yes) for his first term moved UP from $0.83 to $0.86, the price as of the time of this writing. The price on President throughout 2019 moved from $0.97 to $0.99, the highest that it can go.

My only theory on this is that people didn’t realize what the full removal from office process consists of and that simply impeaching President Trump is insufficient to cause him to be removed from office. Bettors may also have not considered the implications of the fact that two-thirds of the Senate would have to vote for removal, rather than the simple majority of the House of Representatives needed to present the articles of impeachment.

It would seem like my assumption inherently accuses some people of being ill-informed, until recently, and I regret to point out that is exactly what I am doing. All of my articles to this point have emphasized the incredible unlikelihood of the Senate removing Donald Trump from the office of the President and have outlined what would be required for that to happen.

If one positive has come out of the whole thing, I would suggest that people have now followed this action closely enough to understand how the actual process of impeachment/removal works, so that’s something.

Again, the makeup of the Senate is a fixed factor. It’s also the most significant factor.

In any case, I think there’s still some clear value in the proposition that President Trump will finish his first term with a cost of $0.86 on the yes. If anyone is inclined to take that side, I would take it now, because I can’t fathom a reason for it to meaningfully drop again...especially now that people seem to be getting the idea that the Senate will likely not be removing the President.

In one of the previous articles, I briefly discussed how PredictIt’s fee structure works, so if I may borrow from myself.

The first thing that we are going to assume is that you do not currently have any money invested on PredictIt.org, but it’s actually even better if you do. The reason why is because you eat a 5% fee on withdrawals, but those are already sunk costs if you’ve got money in there.

However, we are going to make that assumption that you have no money in there so we can take a worst-case scenario view.

The first thing that you will notice is the binary’s phrasing:

Will President Trump be in office by year’s end 2017:

Yes: $0.80 No: $0.20

The way that a binary option works is that you can purchase shares in either the, ‘Yes,’ or, ‘No,’ and, if you hold the shares until completion, (in this case until Trump is either out of office or the year ends) then the binary will resolve at $1.00/share if you had the winning side and $0.00/share if you have the losing side. In the meantime, you can sell your binary shares at anytime in the event that you are able to find someone willing to buy them.

Of course, very little in life is free and this is no exception. In the case of PredictIt, they will charge a commission of 10% of your profits in the event that you either win at $1.00/share or if you sell your shares at a profit. In the case of this binary, you would profit $0.20/share taking the, ‘Yes,’ and will be charged $0.02/share as a result. In effect, you will have a return of $0.18/share if you win.

Unfortunately, unless you choose to leave money on the site, there is one direct fee that you will have to contend with. If you choose to withdraw your funds, then you will be charged a flat 5% fee on the entire amount withdrawn. In other words, if this is the only bet you will ever make on PredictIt, you will eat 10% of any profits and 5% of your total balance after profits.

What that means is, assuming you win, you will receive $0.98/share to your balance based on a bet of $0.80/share and will pay 5% of the total balance after resolution. If you buy 100 shares, then you will either lose $80 ultimately, or you will cash out $93.10. The $93.10 comes from the $98 you will finish with (10% Commission on $20 is $2) multiplied by the .95 that you will get after withdrawal fees which results in $93.10.

Ergo, you will either profit $13.10 or you will lose $80, pretty simple.

Okay, so let’s apply the same concept to this bet:

The first thing that I want to do is determine what I think the probability is that Trump doesn’t finish his first term, which is a probability I put at about 2% (death, mostly). So, we have the following:

(.14 * .98) - (.02 * .86) = 0.12

Okay, so we expect to win 12 cents for every $0.86 bet (if you agree with my probability) and we will eat 1.2 cents in fees if we do. That brings us down to 10.8 cents of which we will have to pay 5% on all funds if we choose to cash out. Total funds would thereby be 96.8 cents on this one, so (96.8 * .95) = $0.9196 or $0.92. Therefore, you would ultimately have an expected profit (again, if you agree with my probability) of 6.2 cents for every share bought whilst risking $0.86/share. With that, I see:

.9196/.86 = 1.06930232558

Which looks like a 6.93% advantage to me, roughly.

As always, one thing to keep in mind is that you are risking substantially more than you stand to gain. Another factor that should play into your decision is the fact that this bet doesn’t resolve for more than a year, so whatever you invest will be sitting there doing nothing for a long time unless you decide to sell it off early. Also, selling it off early isn’t even really all that viable (even at a profit) because it’s important to remember that the 5% cashout fee applies to your total balance, not only your winnings.

Market Inefficiency

What strikes me as somewhat interesting is that there is a bit of inefficiency as we look at the different markets, though that is to be expected when we are dealing with binaries. For example, here are two other current lines directly related to the question:

Will Senate convict President Trump in his first term? Yes $0.10, No $0.90

Will Trump resign in his first term? Yes $0.12, No $0.88

What I don’t understand is that neither of these things would account for any possibility of death, but both would result in Trump not completing his first term. In the meantime, if we multiply the No probabilities together we get:

(.88 * .90) = .792 or 79.2%

With an efficient market, these probabilities AND accounting for the possibility of death should equal the total probability of him not finishing his first term, which is implied to be 86%, instead it is well below that.

Let’s assume for a second that you intend to buy $100 worth of shares one way or another (as many shares as that would get you) and I am going to assign a 0% probability of the Senate convicting Trump and a 1% probability of him resigning (maybe, if he loses the 2020 election, I guess?), then we get this for $100 in shares:

Finishing Term---Yes @ $0.86

100/.86 = 116 shares at $99.76

((116 * .14) * .98) - (.02 * 99.76) = $13.92

$13.92 - (13.92 * .10) = 12.528 or $12.52

$99.76 + $12.52 = $112.28

112.28 - (112.28 * .05) = 106.666 or $106.66 (they probably round everything down)

So, ultimately, we know what we are looking at, we can either have an actual win of $6.90 or an actual loss of $99.76:

106.66/99.76 = 1.0691659984 or a 106.9% expectation, as we saw above.

Okay, let’s compare that to taking $50 on the other two binaries and buying as much as $50 will get us with my best guess actual probability of those events.

Senate Conviction and Removal---No @ $0.90

(.1 * 1) - (.9 * 0) = .1

55 shares @ 49.50

.1 * 55 = 5.5

5.5 - (5.5 * .1) = 4.95

49.50 + 4.95 = 54.45

54.45 - (54.45 * .05) = $51.7275 (they’d round down to $51.72, I assume)

51.72/49.5 = 1.0448484848 for a 104.5% expected return.

Honestly, I tend to like this bet better by itself even more than Trump completing his term. For one thing, it takes away every variable aside from the Senate convicting him which, sorry folks, nothing to see here. Not. Happening. In fact, it became even less likely given the fact that every single Republican in the House of Representatives voted against both articles of impeachment. Even if the Senate were inclined to convict Trump, they’d basically be jobbing out their compatriots in the other Congressional body if they did.

More than that, the Senate might not even ever see these articles. That might have been Pelosi’s game plan all along.

Trump Resigns---No @ $0.88

I’m going to assign this one a 1% actual probability just because I could envision a bizarre world in which Trump loses his 2020 reelection bid and chooses to resign as a result. He could theoretically do it one day before the new President has to take office, thereby making Mike Pence President for a day whose first order of business is to turn office over to the newly elected President.

In fact, I’ve actually decided that I could maybe see this happening. Maybe 1% is lowballing it a little. I could see where Trump might refuse to be the one to turnover the office.

Conclusion on Removal/Resignation Betting

My conclusion is that removal by The Senate is NOT going to happen and was never going to happen. Even if there had been a shutdown case on Impeachment with 60% public support, including the support of some Republicans, there is no way I could see that happening.

Honestly, I think the value of the Senate Removal---NO is so great with what I would assume a 0% probability of occurrence that I’m inclined to take the sure thing and not even play around with Trump finishing his term (yes) or Trump resigning (no).

Like I said, the Senate Removing from Office---NO just eliminates every single other variable that there is. Not to be morbid, but if Trump were to meet his demise, your bet would win. If Trump were to resign in the face of a potential Senate removal, your bet would win. In my opinion, there is simply no chance of losing this one. Even if something crazy were to happen and it looked like the Senate might convict Trump, he would likely just resign because it would have to be some sort of dead-to-rights thing anyway.

Also, given the possibility of him resigning (even if just by a day or a few minutes) if he loses the 2020 Election---no thanks. I’m good with eliminating every single variable and taking my guaranteed profits with this absolute stone cold lock.

OTHER POLITICS BETTING

-For this part, I’m just going to fire off some opinions. Examples of how the math works are above, so feel free to apply the same concepts to these. Please read the disclaimer at the top of this article if you haven’t yet, this should primarily be considered an entertainment piece and not encouragement to bet or actual betting advice.

Clinton for President (AGAIN?)

For reasons unknown to me, Hillary Clinton is at $0.06 Yes, $0.94 No to be the Democratic Presidential Nominee. In my view, that’s almost free money. I know, I know, what if contested convention...well, shame on you if you lose to Trump once and shame on the DNC if you lose to Trump twice. There would be a Democratic revolt if this happened. It’s the only way I could see the creation of an extremely meaningful third-party.

I put the probability of this at infinitesimally better than completely impossible. In other words, nearly free money on this one if you already have money in PredictIt anyway. If you don’t, it’s probably not worth buying in for this because if you deposit $100 you have to pay $5 (plus 5% of any winnings after the 10% profit fee) to withdraw it back out.

Even then, I’d still be inclined to put all my eggs in the Senate Convicts---NO basket while I can get that at $0.90.

Buttigieg for President

If you like a long-shot, I think Buttigieg is a little undervalued at $0.15 for the yes to be the Democratic nominee, but I wouldn’t personally take it. Apparently, he’s leading or close in a couple of the early states, and I think we all remember the charge that Rick Santorum made back in 2008. I think we also remember that Rick Santorum did not win the Republican nomination in 2008.

I think the most likely result of this is just losing without it ever really being close. I think the second most likely result of this is a heartbreaker (like it would have been for Santorum bettors). However, it is possible to sell this for some value if his standing improves...which it actually should at least a little bit if a few of the candidates not to make the most recent debate drop out. I could easily see it going over $0.25 if a few candidates drop out and he manages to win a state.

Trump for President

Why is Donald Trump only at $0.88 on the yes to be the Republican Nominee for President? This is an absolute lock and is almost as much of a lock as the Senate NOT convicting and removing him. One difference between the Senate bet and this one is the possibility of death, so I still like the Senate Convicts---NO bet better, but this one is also pretty juicy.

CONCLUSION

That’s it for now, so my main takeaway is that the bet I really like is the NO for $0.90 on the Senate to convict President Trump and remove him from office because it is just totally not happening. I mainly like this as a bet because it only focuses on one thing and, not only are there not any variables for this bet, but the variables for other bets (Trump passing away or resigning from office) would cause this bet to immediately win.

Another thing that I like to do is not look too far down the line when it comes to these things.

Even in my first WoV Article on this subject, if you look in the comments.

My betting numbers were never about Impeachment. For one thing, such a bet would have taken years to resolve, so even if there had been identifiable value, on an annual basis, it would have sucked. As mentioned in the comments was also the possibility of a Democratic majority in the House of Representatives, (which they did not have at that time) but it does sort of take away from our revisionist historian friends that certain Democrats weren’t gunning for Impeachment the entire time...because there we are in 2017 discussing it.

And, of course, the Impeachment---NO bettors didn’t do terribly well. But, the, “Remains in Office,” bettors haven’t lost yet. I also said remaining throughout 2019 was a sure thing in my last article on this subject, that won, but now the possibility of losing reelection and resigning has entered my mind...so we’re going to go Senate Convicts---NO as the mortal lock of the day.

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