Could gamblers predict the mayoral race?

Good morning. It’s Wednesday, May 20, and you can expect a high of 85.

Bettors have poured more than $3 million into this year’s mayoral race on Kalshi, the online prediction market that lets users gamble on everything from politics to the weather.

That’s roughly triple what bettors put into last year’s Democratic primary in New York City at the same point in the race, according to an L.A. Material analysis of the platform’s data. It’s a testament to the explosion of online prediction markets, which have only recently started offering bets on U.S. elections thanks to court rulings in 2024.

Kalshi operates much like the stock market. Bettors trade “contracts” based on the outcome of yes or no questions — will Karen Bass win the election? — and prices fluctuate with supply and demand. The higher a contract’s price, the more likely traders believe that outcome is to occur. (Right now, Kalshi gives Bass a 61% chance of winning.)

Of course, prices don’t indicate how bettors plan to vote: They indicate how bettors think other people will vote. But Kalshi has claimed that its markets “often beat polls” in their ability to predict the outcome of elections, and some news outlets now routinely cite Kalshi odds in stories about elections. Studies have shown that prediction markets outperformed pollsters in the 2024 presidential election, and have lent credence to the idea that large groups of people can predict electoral outcomes — there’s wisdom in crowds, so to speak.

Many polling experts have chafed at this, arguing that online bets are no substitute for scientific surveys.

“Polling is designed to measure public opinion and give everyone a voice,” said Spencer Kimball, executive director of Emerson College Polling Center. “Prediction markets reflect the views and behavior of a relatively small group of participants trying to forecast events.”

Other critics have assailed prediction markets more broadly. They point to instances of insider trading, and reports of widespread gambling addiction. But what many people today don’t realize is that political gambling is hardly a new thing.

For much of the 19th and early 20th centuries, political gambling was practically a national pastime. Newspapers, which didn’t yet have access to modern polling, regularly published election odds on their front pages, which researchers have found were remarkably accurate. 

New York City’s Wall Street was a hub for political bets, but L.A.’s market at times ran hot.

In November 1906, the Los Angeles Daily Times reported that, on election night, “almost every cigar stand in the city was turned into a miniature gambling outfit,” and that bettors had wagered more than $100,000 on races in California and New York — about $3.3 million in today’s money. No cigar stand saw more business than Ellis Cohn’s on Spring Street. 

Cohn called that year’s mayoral contest “the largest and most exciting ... in the history of the city.” Cohn, who was dubbed “the keenest political gambler in California” by the Times and was later sued for allegedly selling counterfeit cigars, added: “Today men I never knew to bet before have leaned over this counter with beaded brows and begged for a chance to place their money.” 

The introduction of scientific polling in 1935, along with moral concerns about election gambling, eventually led to a decline in the practice and new legal restrictions.

Confused about what the city controller actually does? Or how city matching funds work? Or what the local propositions on your ballot really mean? Or the difference between an official campaign and an independent expenditure?

You’ve got election questions, and our journalists will report them out and bring you answers. We’ll publish a non-partisan ballot decoder late next week for L.A. Material subscribers, with answers to our reader queries. If you’d like to submit a question, please do so by this Friday, May 22.

CHEEKY KAREN: It was enough of a snub for Nithya Raman when three members of the City Council’s progressive bloc endorsed Karen Bass. But to add insult to injury, Bass’ press release on Tuesday included a complete list of council members who endorsed her… including Raman herself, before her last-minute entry into the mayoral race in February.

MOSQUE SHOOTING: The teenagers accused of killing three people at a San Diego mosque met and were radicalized online, the L.A. Times reported. The FBI said the gunmen left behind a manifesto “outlining religious and racial beliefs about how the world they envision should look like.”

WAGE HIKE PUNTED: City leaders reached a compromise Tuesday that'll postpone a long-approved wage hike for hotel and airport workers until after the 2028 Olympics, the L.A. Times reported. In exchange, a group of business leaders agreed to back off their plan to put a tax repeal measure on the November ballot that, if approved by voters, would have blown a hole in the city budget.

GOVERNOR’S RACE: The New York Times assembled a panel of political experts to create a handy interactive guide to this year’s gubernatorial race. 

UMBRELLAS ONLY: A Laguna Beach ordinance banning anything larger than an umbrella on the city’s beaches goes into effect next week, the California Post reported. Instagram commenters aren’t pleased. “Laguna Beach city has turned into a giant HOA on steroids,” wrote @spennynbetts.

For today’s peek inside our subscriber-only Discord server, Greg Ruben has a neat collection of L.A. matchbooks.

AND FINALLY… A poem to pair with your morning coffee: “I Won’t Lie” by Jennifer Wheelock.

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