How Low Can You Go?

Gambling on the Presidency

The College of Business Administration at the
University of Iowa runs the Iowa Electronic Market, a futures market on this
year's presidential election. Anyone can buy a contract on President Clinton,
the yet-to-be-designated Republican candidate, or someone else. It's a
winner-take-all market: Contracts on the winner pay off at $1 on November 6,
while others expire worthless. On the day of the New Hampshire primary,
Clinton's contracts, which had risen in recent weeks, were bid at 51.1 cents,
while those of the Republican stood at 39.3. Political insiders watch these Iowa
numbers closely: In the two last presidential elections, the Iowa futures market
accurately predicted the results at the ballot box.

Gambling used to be considered deeply reprehensible, especially by
conservatives. Gambling casinos were shunned by respectable people and
politicians (who we do not mean to imply were distinct from one another). No
more. As the New York Times reported in December, gambling interests
have emerged as either the biggest or nearly biggest legislative lobbies in such
states as Illinois and Louisiana. The president of the American Gaming
Association, Frank J. Fahrenkopf, Jr., is a former chairman of the Republican
National Committee. The day after denouncing the values of Hollywood last
summer, Senator Dole went to a Las Vegas country club for a big fundraiser
organized by Steve Wynn, one of the leading figures in the gambling industry.

The new respectability of gambling suggests that we might be able to take
the Iowa futures market one step further. While no one has yet noticed it, here
is a solution to the problem of campaign finance. Instead of just asking
Americans to contribute to political campaigns, we can also invite them to
gamble on one. Steve Forbes has already shown the way by gambling millions on
his own campaign. In fact, besides adding an item for presidential gambling to
the 1040 and requiring motor-voter betting, we could combine the actual election
with one last gamble, taking advantage of the resemblance of a voting machine to
a slot machine. The "house" could easily skim off enough to cover the
costs of campaigns.

To be sure, some conservatives may object to this proposal--on the grounds
that, once again, government would be undertaking an activity that properly
belongs to private enterprise. This objection may be overcome by contracting out
elections to the casino industry. Donald Trump might even suggest that we use
gambling results in place of balloting, but the smart money is against it.

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