Is A Trump Impeachment a Good Bet?

It’s not often that politics-driven betting gets to find itself at the forefront of gambling conversation. In fact, such an occurrence is usually limited to major events in the world such as Brexit or the most recent United States Presidential Election. The recent election in France also saw some meaningful action take place, as well, despite the fact that the result was an utter landslide.

In the meantime, we get a politically-driven proposition not directly tied to an election, or even to a public vote (as was Brexit) for that matter. What we are talking about today is the betting taking place on whether or not President Donald Trump will be impeached.

It’s not often that I come out and make major predictions on anything because I usually have to be sure that I am right. I have to be pretty confident. However, I am two for two in the last two major events I have predicted, which were last year’s Presidential Election and the Super Bowl.

For the record, despite the Super Bowl being perhaps the most unusual one in history consisting of a Patriots comeback that would make for a bizarre regular season game, let alone the greatest stage of them all, it doesn’t change the fact that my pick of Pats against the spread was a winner. An overtime winner, granted, but a win is a win!

In terms of the Presidential Election, full disclosure, I never said that Trump would win. As a matter of fact, I specifically said that I did not think that Trump would win. However, my positions across a few different articles were consistent in saying that I thought Trump was undervalued in both the betting and binary markets.

I don’t want to get into anything divisive, so I’m not going to give my opinion on whether or not I think Trump’s victory was a net positive. The only thing that I will say is that anything other than a Clinton landslide (which obviously didn’t happen) served to prove my position that Trump was undervalued in the markets. There were times that, relatively close to the election, you could have easily gotten three-for-one odds on Trump winning. Binary positions were also similar, from a value standpoint.

Some people might ask, “But didn’t you base your Presidential position largely on what FiveThirtyEight.com had to say about the matter?”

My answer to that is pretty simple: No, shut up, I’m a genius.

That’s not true at all. The truth is that I did largely base my position on the prognostication of Nate Silver & company. The other sad truth is that I am not a genius, but I’m smart enough to listen to geniuses when they are kind enough to speak.

Nate Silver and Co. also predicted a, ‘No,’ on Brexit, but again, they said that it was much closer than the betting markets had it in the early stages. Again, they were right. I believe that I may have agreed with them that time, too, but I don’t think that I published that article until after the fact.

I am kind of flying solo on this one because there is not much regarding statistical data when it comes to Presidential Impeachments, primarily because they don’t happen terribly often. Furthermore, the information from the pollsters that 538 uses for other things is not relevant because there are no polls to be had other than polls that are opinion. If it comes to whether or not an impeachment will actually occur, of course, the public has no direct say in any such affairs.

Until recently, there was no real question of impeachment in the betting markets. As of a couple of weeks ago, the binary markets effectively had the probability of Trump being impeached at any point in his term between five and seven percent. While that is certainly greater than the numbers that we would expect in most administrations, if there were any numbers at all, they were still not high enough to constitute anything more than an extreme long-shot. The thing about long shots that are not based on strict mathematical facts is that they are hard to analyze.

A number of events (well, two) have taken place to make the possibility of impeachment much more likely in the public eye, which is reflected in the current betting markets.

The first such development is the firing of FBI Director James Comey which, most people believe, comes about at least in part of the investigation of Trump’s alleged Russian ties. There is some speculation that Russian interests partially influenced the Presidential election of last year. Perhaps even more alarming are the murmurings that Trump shared classified information on the United States with Russia both in advance of the election and after.

Obviously, it’s not a good look to fire a guy who happens to be actively investigating you and one cannot help but believe it might have something to do with the fact that the investigation is taking place. Furthermore, as lawyers are wont to do, Comey kept extensive records of any conversations he had with anyone in the Trump Administration and has been releasing those records fairly gradually.

The Comey papers reflect a lot more than just dealings with Russia. Under Comey’s watch, the FBI had launched an investigation into Trump’s former National Security Adviser, Michael T. Flynn, that Trump directly asked Comey to bring to an end. Comey claims that Trump said, “I hope you can let this go.” Apparently, Comey couldn’t just let it go (if what he says is true) so Trump decided to let him go.

If proven to be true, these papers would seem to serve as evidence that President Trump, at a minimum, attempted to influence a Federal investigation. We have readers from countries all over the world here, and I imagine that interfering in a national investigation is a big no-no in most of them. The United States is no exception.

Furthermore, notes taken by a Federal official (which most certainly the Director of the entire Federal Bureau of Investigation is) are generally deemed as admissible in court. For those of you unfamiliar with the events surrounding Flynn’s resignation, feel free to look them up if you like, but I will say that they involved Russia!

Speaking of Russia, the termination of James Comey has not had the result of ending the investigation into the Russia matter, either, as a special council has been formed to determine whether Russia had an influence on the election to Trump’s knowledge. This special council may also undertake other investigations as involve Russia, and the FBI is currently investigating Trump’s dealings with Comey.

The special council I mentioned is headed up by none other than former FBI Director (immediately prior to Comey) James Mueller, who was dragged out of private practice to look into the matter. The findings of the special council will go a long way into determining whether there is any real possibility of Trump being impeached. The council may determine that nothing of note happened.

Regarding the possible influence of Comey’s successor on any potential investigation, or whether or not such an investigation would be dropped, that is why the special council was set up in the first place.

Deputy Attorney General Rod Rosenstein released the following statement regarding both Mueller and the creation of this special council:

"My decision is not a finding that crimes have been committed or that any prosecution is warranted. I have made no such determination," Rosenstein continued. "What I have determined is that based upon the unique circumstances, the public interest requires me to place this investigation under the authority of a person who exercises a degree of independence from the normal chain of command."

The long and short of that is that the public essentially does not trust the FBI, whose new Director would be installed by Trump, to act as an independent agency looking into the matter. In other words, they specifically want someone from outside of the Trump Administration to handle it due to the significant public interest in the matter. As Rosenstein points out, that does not mean that the council will find anything or that he is personally aware of any evidence.

If we combine all of these factors with a country highly divided along partisan lines and an approval rating for President Trump that was already in the toilet before these events came to light, it would seem that we have a recipe for a dish called, ‘Impeachment.’

But...wait just a minute.

First of all, it does bear mentioning that the special council has not even meaningfully begun the investigation yet, and anything they find may not be enough to convict Trump of anything at all, much less impeach him. Further, while the Comey papers seem damning, if that is the full extent of everything Comey has on Trump, it would be tough to make any charges of impeding an investigation stick. For one thing, Trump did not appear to demand that the investigation into Flynn be stopped on that call, it just seems like he made a request. Furthermore, it doesn’t seem that there was any implied threat to Comey who himself was surprised by his sudden dismissal as FBI Director.

In other words, all we have for sure right now is vague notions and allegations. Individual people can have any opinion that they want to, but with respect to Russia, nothing extremely solid has yet been released for the public consumption. Besides that, even if the allegations against Flynn end up being found to be provably true, that does not necessarily mean that anything Flynn did came either by way of the direct orders of Trump. Hell, it could even be argued that Trump had no knowledge of Flynn’s doings, as his failure was in not reporting certain dealings with high-level Russians officials to Vice-President Mike Pence.

While I will not go into details, it would hardly be the first time that the Trump Administration did something inherently contradictory. It often seems like the left hand doesn’t know what the right hand is doing in this current White House!

The recent news came to a real head just this month, and as a result starting on May 8th, Predictit.org binary option prices on a, ‘Yes,’ for Trump to be impeached soared from seven cents all the way up to thirty-three cents, which was the high seen just last week. As of the time of this writing, the current ask for the, ‘Yes,’ was twenty-two cents with the most recent move having taken place at twenty-one cents.

In fact, the thirty-three cent price (implied 2:1 Odds!) held only briefly as individuals who had bought way earlier probably rode the wave about as high as they figured it would take them and got out of the market. My opinion is that they got away with a profit they shouldn’t have realized there. The Predictit Binary Option is based on this year, so the notion that Trump will be impeached in the next seven months I find extremely doubtful, but more on that later.

Fortunately, for all of you readers out there, most of you are not located in the United States so you can actually place a bet through a real sportsbook! Here in the United States, we can only get away with Predictit because politics betting is effectively illegal, but Predictit skirts those laws by being classified as a site primarily for research.

Yup, research.

So, let’s research whether or not we can make some money on this bad boy!

Jumping over to Ladbrokes, I’m looking at a current line of 7:4 on Trump to be impeached OR resign by the end of the year. In other words, betting $100 would get you that $100 back as well as $175 more for a total of $275. If you put $100 in on that binary option at $0.20, and the impeachment happened, you would get your original $100 and $400 more for a total of $500. The key difference in the Ladbrokes number is that it includes resignation whereas the PredictIt binary option is for impeachment only.

There is also a 4/6 line where betting $100 would win you $66.67 for a total of $166.67 on Trump either being impeached or resigning prior to the end of his first term that I think is an absolutely putrid bet, though not as bad as impeachment only this calendar year!

In fact, Ladbrokes seems to legitimately believe that Trump serving is first full term is less than a 50/50 scenario as they are offering 11:10 where a $100 bet would win the original $100 and another $110 for a total of $210.

As you can see, Ladbrokes is leaving itself a pretty wide gap on this one. Let’s say that you bet $100 each way (which would make no sense of course) Ladbrokes would lose $10 to you if Donald Trump were impeached or resigned but would win $33.33 off of you if he served his full term, which makes the spread $23.33. That spread represents 11.665% of the total amount bet.

Naturally, any novelty betting is going to come with a pretty significant spread. As a result, you need to be confident in your position to take a side. Personally, I like the notion of Trump serving his full term if I am getting some small odds, but probably not enough to make a bet on it. Besides, what do I care about some $100 bet that is not even going to resolve in the next three-and-a-half years necessarily? Yeah, no thanks. Inflation would probably eviscerate the value of some of my winnings anyway, which effectively increases the edge against me.

Beyond that, you would also have to make sure to keep your account active to whatever extent the Terms & Conditions of the site state that you have to, or they automatically win the bet anyway!

The real issue that I want to focus on in this editorial is the question of whether or not Donald Trump will be impeached at the end of this year, and again, I’m going to base this on Predictit to not include resignation. Quite frankly, when you throw resignation into it, I really don’t want to take a position just because of how unpredictable Trump is, in general. He might resign just because he wakes up one day and decides that being POTUS is boring.

The first thing that we have to look at is what is the actual meaning of, “Impeachment,” in the sense that applies to the bet? It’s very difficult to understand a bet if you don’t understand the terms of the bet, and not understanding the terms can often lead to bad decisions.

Here’s a question: Did you know that Bill Clinton both was and was not impeached?

The confusing thing about impeachment is that it is a two-stage process, but the first stage of the process coming to a conclusion (for those that want you impeached) has nothing to do with whether or not the party to be impeached is removed from office. Even that process is complicated.

The first thing that has to happen is that the impeachment must be referred, in the House of Representatives, to the House Committee on the Judiciary. The current makeup of that committee is 23-17 in favor of Republicans, but even more importantly, let’s take a look at the specific districts represented in that committee. Because I don’t care at all about most of these people, I’m just going to list the district codes and results:

*The low percentage of the Utah win is attributable to Independent in name only (Republican) Evan McMullin being on that ballot in his home state.

Ultimately, this committee only has one split district, which is to say a district with a Congressman opposite the party of the President. Granted, it is in favor of Clinton, but it still leaves Representatives from twenty-two of forty districts that Trump won, and he won a few of those pretty handily. The other thing about Trump is that his most fervent supporters support him, so next time you’re a Congressman up for re-election in a district that backed Trump heavily, do you also want to be known as the guy who helped begin the impeachment process? Especially not, if you are also facing a primary challenger within your own party.

Besides that, many of these individuals endorsed President Trump, so to go from that to declaring that he is unfit for office and should face charges before the full United States Senate. Well, that just doesn’t make you look very bright, now does it?

If the impeachment proceedings were to make it out of the Committee, then the Impeachment charges must be heard and voted upon by the full body of the majority-Republican House of Representatives before the matter is moved on to the Senate by way of a few House Managers. Once again, in addition to being majority-Republican, many of the constituents are going to be fervent Trump supporters, so again, do you really want to pursue reelection having impeached him?

It’s not enough for him to merely be an unpopular President. It can reasonably be argued that Hillary Clinton is more likely than not to have had an approval rating below 50%, too. In the case of Trump, as long as he can keep his loyal band of die-hard supporters, impeachment is going to be a tough pill to swallow for any Representative who wants to get reelected in a Trump district.

It’s the whole self-preservation thing. Granted, if every Representative were to vote according to what he/she believes, then the question will be one of the manifest weight of the evidence against Trump, which is neither known nor has yet been presented. However, belief is going to be the most important thing to each Congressperson. The office-holder might say, “I believe I will lose my seat if I do this, so I’m not going to.”

If, that process seems pretty complicated so far, good because it’s meant to be! Impeachment, especially the kind that would result in removal from office, was never supposed to be an easy affair that the Legislature can do on a whim. If it were, then it would be utilized more often and the entire political process would be in a constant state of turmoil with one impeachment consistently followed by another ad infinitum. For that reason, what is referenced above is only half of the process.

The second half of the process involves the Senate which is the entity to whom Congress levies its charges by way of an Impeachment manager, or managers. After the majority vote of the full House of Representatives has been taken, the matter is then ready to be presented to the Senate. The Senate proceedings are more similar to a court trial whereas the House proceedings were more similar to a vote on a bill. During this time, the President has still not been removed from office.

During this trial-like process, witnesses can be called as well as those witnesses and the accused being cross-examined as to the material facts of the impeachment. The House of Representatives, by way of its managers, acts as would a prosecutor and presents its case against the defense. After that, the defense can refute that case as well as the ability to be represented by an attorney. Given the nature of the few offenses that could potentially lead to Impeachment, it is, in fact, a criminal matter.

Furthermore, whereas the House of Representatives required only a majority vote to move forward with the proceedings, the Senate requires a two-thirds vote in order to find the impeached guilty and convict. What that would mean is that, if all 100 Senators cast a vote, 67 of them would have to vote for impeachment.

Again, in a Republican-controlled Senate. In such a Senate that many of the Republican Senators might as well concede the election to their primary challengers (or perhaps even general election challengers) if they fall afoul of ardent Trump supporters. Therefore, not only does the actual evidence for impeachment have to be there, but you also want the evidence to be sufficient in the view of your constituents (state population) to keep your job.

Both of these things must happen for Trump to be, “Impeached,” in the sense of being taken out of office. The binary option on Predictit also does not appear to have resigning constitute impeachment, which means that if Trump were to resign in the face of potential impeachment proceedings before the Senate, the bet may lose.

Regarding impeachments that have happened, many people are under the misimpression that Nixon, Clinton and Johnson were all impeached. That notion is incorrect for two reasons: The first is that Nixon was not impeached at all, he resigned before the articles of impeachment even went before the full House of Representatives. Both Bill Clinton and Andrew Johnson were, “Impeached,” by the House of Representatives, but neither were ever removed from office, and the Senate cleared both. Long story short, an impeachment that led to a direct removal from office has never happened.

For an impeachment to take place before the full Senate, the U.S. political process that typically moves at a snail’s pace would have to be almost unprecedentedly fast for that to happen by the end of the year. If we look at the only two Presidents to ever actually face Senate proceedings, it took a little over three months for the Senate to eventually acquit Andrew Johnson after the House had brought impeachment proceedings. In the more recent case of President Bill Clinton, it took the Senate nearly two months to come up with that acquittal after referral of the matter to it by the House.

In other words, you have a process that should take at least two months after referral of the matter from the House of Representatives to the Senate. In the meantime, the matter would still have to get through the House Judiciary Committee and then clear the House vote. As expected in the Senate, the vote to impeach Clinton largely took place along party lines with not a single Democrat voting to impeach him.

The time that the independent investigation of the special council is likely to take will depend largely on how cooperative with the investigation the Trump Administration is. While they can certainly not obstruct it, they might do everything that they can to stall it out for as long as possible. Another difference between Trump and Clinton is that the House Judiciary Committee, as well as the full body of the House, were the opposite party of the President in the case of Clinton. Simply put, Clinton was facing the vote of Congressmen who both wanted him gone and would potentially gain favor with their constituents by ensuring that Senate proceedings against him took place. While the matter did make it to the Senate, it was almost a sure thing that the Senate would not convict before the proceedings had even begun.

There are a number of Republican Senators who have spoken out against Trump, in general terms, most notably Arizona Senator John McCain. However, it is difficult to imagine that the Democrats would find enough Republican support for impeachment to hit the 67 votes that would be needed for a conviction to happen.

The politicking behind the politics might not even be relevant because nobody making these bets really has any idea what the special council will uncover, or whether or not those things would be enough to lend itself towards a meaningful attempt at an actual impeachment by the Senate. The only thing that we know so far is that there have been a ton of allegations against Trump, and a number of seemingly unsavory things have occurred in his Administration, but Trump would need to at least be proven to have direct knowledge of those things for anything to constitute a crime.

In short, the evidence against Trump found by the special council would need to be incredibly strong for an impeachment process to even begin in the House, much less pass 2/3rds of the Senate. You’re going to need to get people in the President’s party to vote to convict him.

Furthermore, it’s hard to say whether or not the Democrats would unanimously want him out of office. While it seems to make sense that they would, it is important to remember that a President with such a dark cloud hanging over his head should be somewhat easy to beat in the General Election in 2020. If your party has the opportunity to go up against a President suspected (by the public) of criminal acts and with a deeply unfavorable rating, why would you pass up that probable win? It might be in the best interests of the Democratic Party, long-term, just to leave him in there and effectively have him serve as a lame duck President for the remainder of his term.

How to Play It:

Granted, some of the people picking up binary options on the, ‘Yes,’ side of the impeachment question might be doing it strictly for a value play figuring they can sell off those options for profit at a later time. I certainly imagine that many of the individuals who bought in at less than a dime got out of it when they were able to take more than double the amount of money for which they bought in guaranteed. If you are in for a dime and can get out for $0.20, effectively, you’re now betting twenty cents on the option if you hold your position. The money is there for you to take as long as you have someone willing to buy out your position.

There may be some people getting in just now which has steadied the price over the last week, or so, on the binary markets. Those people may think it is as likely as not that a favorable news cycle for them (which is to say one unfavorable for Trump) will drive up those prices again and they can get out of the option with a win. Again, hopefully, they know more about how to play that than I do because I would not be playing it that way.

If I were going to make a bet at all involving 2017, it would either be a bet for President Trump to be impeached or not impeached and I would hold my position on it. While I do think there is a very remote chance he could resign, I’d need to be able to turn $100 into at least $500 before I would be willing to take the position that he is out of office by any way other than death before the end of this calendar year. I just don’t see the investigation happening quickly enough and, unlike Richard Nixon, I don’t think Trump would resign before the impeachment matter at least passed the full House of Representatives.

On the, ‘No,’ side, I might scoop up some of those binary options if I can get them for eighty cents on the dollar AFTER any commissions. What that means is that I will need to wait for the price on the, ‘No,’ to drop a little bit. When you sell shares (or when a result goes your way turning your value into $1), PredictIt charges you a 10% fee to cash in. In taking the, ‘No,’ side, I would effectively have to get it for $0.77 for each option to have effectively paid $0.80 or less for each option if the position is successful. If I include the slight possibility of losing into that, then I would probably want to pick it up at about $0.75.

If it seems like I am holding out for too much on that, you may be right, as the betting markets and news cycles may not ever be as favorable again for impeachment to happen this year as they are now. In other words, for the, ‘No,’ to look worse, I need the, ‘Yes,’ to temporarily look better.

If I have missed the boat on this one, that’s okay; I should have been paying closer attention. I was certainly aware that there were betting markets for a Trump impeachment, in general, but I was kind of surprised to find that anyone would expect such an event to take place this calendar year. I’m not even saying that it can’t happen, if I were, then I would take the, ‘No,’ at any price. I’m just saying it would require an unprecedented event to happen at unprecedented speed.

When it comes to a, “No,’ bet for resignation or impeachment, I’m not quite sure where I stand on that as a fair line for 2017. The resignation thing kind of throws a monkey wrench in it because, if the impeachment proceedings at least made it through the House of Representatives, I could see Trump resigning (in exchange for a pardon from Pence) as Nixon did when he got pardoned by Gerald Ford. Again, for historical accuracy, the matter on Nixon never actually made it to the Senate, but the same concept.

I don’t know what I would want to get there because throwing resignation in the mix makes it at least a little bit more likely. I would certainly lay a little bit, but I would want the best of the bet by a long shot. I would probably be willing to lay $60 to win $40 for a total of $100, or in multiples thereof, as of the time of this writing. What that means is that you can get much better odds through Ladbrokes than you’re going to get through me! You can bet the same $40 to win $110 through them as of the time of this writing.

Although, the most profitable thing to do might be to find a couple of friends of yours who are seriously on the opposite side of the political spectrum (if you know they’ll pay) and just middle the Hell out of them on the matter. You could even give them something closely resembling Ladbrokes odds with the only difference being that you can structure it such that you profit either way. The nice thing about an extreme polarization of two sides is that it can result in people on the far end of the spectrum on either side making some seriously misguided bets!

When it comes to the question of whether or not Trump will finish his term or be removed from office by any means other than death, I have no position on that right now. I simply feel as though I lack adequate information to make an educated bet. More than anything, I would need to be able to read the report of the special council when it is released and presented to the House of Representatives, if that even happens. If it does not get presented to the House of Representatives, then I will have my answer!

Conclusion:

What many people do not realize about impeachment is that there is no historical precedent for the impeachment of a sitting President of the United States by the U.S. Senate. Again, both Clinton and Johnson were impeached by the House of Representatives, but that did not lead to removal from office as they were both acquitted by the Senate. Richard Nixon was not impeached at all, but it is quite likely that he would have been had the case been brought before the full body of the Senate.

Further, in addition to being seriously guilty of wrongdoing, there also has to be a political motivation to impeach a president. In terms of the Clinton impeachment, the first thing that we notice is that everyone in his party, in the Senate, voted to acquit him. While Trump may not be as popular in is own party as Clinton was, there are almost certainly going to be political motivations in different states and districts to keep him in office. I don’t want to go down to my constituents in Texas as the guy who brought the notion of Trump impeached before the full House. And you know that is how they will look at it (and how my opponent will play it) if it is decided by one vote or something along those lines.

In the meantime, from the start of this investigation to any potential conclusion before the Senate, this whole thing would take a substantial matter of time such that I don’t even know that it could theoretically be concluded by the end of the year. For that reason, I would definitely stay away from absolutely all bets that lose if Trump resigns, hanging your hat on removal via impeachment is a terrible bet almost regardless of the price you’re getting.

I’ll continue to follow any developments and perhaps write a follow-up at a later date. If the Senate impeaches Trump before the end of this calendar year, I’ll probably hide in a cave until this editorial is forgotten about...unless they give me editing privileges over here.