Sequential vs Simultaneous Games, Live Betting, and the 2020 Election

Why the 2020 election represented a unique live betting opportunity

The 2020 Presidential Election was anticipated to be one of the more interesting (and, of course, country-shaping) events of what has been a wild year. It has not really disappointed thus far, but I’d like to spend some time discussing an apolitical aspect of the election: the betting market.

*Full disclosure, I did not place any wagers on the 2020 election. One of the best pieces of gambling advice I have received came from Noah Ruddell, who said “never bet on things that matter a lot to you”. This election was quite frankly too important to me to also risk my money on. Plus, the sports betting capital of America (that’s right, Jersey baby!) did not offer any markets on the election, leaving me to gamble with the (likely very trustworthy) people calling me a brainwashed lib every time I post something political on Twitter.*

It is here that the wildest portion of proceedings occurred on election night.

After closing anywhere from -150 to -200 prior to the polls opening, Joe Biden had dropped all the way to +375 around 10pm ET on election night. Many used this as an indicator that the election was “over”, but by the the time you had your morning coffee on Wednesday, the odds had flipped back to being heavy on Biden.

As of this writing, the odds for Biden to win the election are currently off the board, as he is expected to win. In fact, it may not end up being terribly close. So were live bettors taking Biden on Tuesday night sharp or lucky?

The Election is a Simultaneous Game

In order to fully understand this scenario, it is important to understand the differences between simultaneous and sequential games. This is something Jordan Cooper (@blenderhd on Twitter) talks about in his audio book, The Theory of Daily Fantasy Sports. His course obviously pertains to DFS, but most of the concepts can be applied to any game.

A simultaneous game is one where players make their decisions at the same time. Note that this does not have to be at the same time chronologically, but that each of the “players” are making their decisions without knowledge of what their opponent is doing. Rock, paper, scissors is a common example of a simultaneous game.

Sequential games are played in some kind of order. Players in sequential games will see their opponent’s moves prior to making their own decisions. Something like chess is sequential.

An election is not a game in the colloquial sense, but it most certainly is one by definition. It has rules, strategy, a winner and a loser, etc. It is simultaneous in nature because every person is voting independent of any knowledge of the other voters. Sure, you may discuss who you are voting for among friends or co-workers, but you will know nothing about the vast majority of your “competitors”.

Why This Matters for Live Betting

If you’ve never placed a live bet before, it is exactly what it sounds like. Not only do books take bets on events before they start, but they also will accept bets as the event is taking place, with odds that change throughout. There is a good argument to be made that live betting, if you have the time, is the best way to attack sports markets, but that is for another time.

The biggest difference between live betting the election versus a sporting event is that sporting events are all sequential games. Whether it is the Super Bowl, Bundesliga, or World Team Tennis, teams and players are making moves in some kind of order, and using that to inform decisions as the game goes along. When you place a live bet on the Chiefs down 24-0 to Houston, the team is informed of the down, distance, time remaining, score deficit, and more. Most importantly, the game itself is not yet decided.

But when you bet on the election, a simultaneous game, you are betting on something that is already over, because all of the votes are already in. This would be like if the sporting event on your TV had already ended, and the plays were being shown in some completely random order.

Now, in a normal election year, this may not be information that you can actually leverage for value. After all, you still don’t know how the votes will come out. Generally speaking, I would say your priors should not move too much on early ballot-counting results. If you believed in the polls and models before Election Day, then knowing how the first few million votes have come in for particular states really shouldn’t sway you. But it also may not move the market a lot either.

In this particular election, we saw massive market movement in the earliest stages of ballot counting. We also knew that early voting results were very likely to favor Trump. A simple Google search would have told you that key states such as Pennsylvania and Wisconsin would not be counting mail-in votes prior to Election Day, and that the polls would be counted first. We also knew that Trump voters were more likely to show up to the polls, while Biden voters were more likely to mail in their selection.

In other words, the election was still going as expected as of 10pm Tuesday night, and the betting markets were way over-reacting. Most likely due to how events transpired in 2016.

Sharp bettors recognized this, and pounced. If Biden is announced the winner (as is expected), they will be rewarded. Just remember that he won it on Tuesday.

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