James Chanos, one of the most successful short sellers in the history of the US financial markets, has a beef with election betting sites, and his personal political leanings could explain why.
Citing data from Kalshi, which reported earlier today that it had earned $94.26 million on the US presidential election, Chanos took to X (formerly Twitter) to express concern that small amounts of money can move election wagering markets, potentially affecting multi-trillion dollar financial markets. Around the time of the Chanos post, Kalshi showed former President Donald Trump leading Vice President Kamala Harris 63% to 37%.
While other sites that allow you to bet on US elections are located outside of the country, Kalshi is based in New York. That company, along with its counterpart Predictit, based in Washington, DC, provide investors the opportunity to purchase election-related event contracts. Kalshi and Predictit are regulated by the Commodities and Futures Trading Commission (CFTC) because these products are considered derivatives.
Chanos Could Be Ruffled By Betting Market Findings
Chanos is open about his political views. His X feed includes criticism of Elon Musk’s comments on illegal immigration, similarly jaded remarks directed at Rep. Byron Donalds (R-FL), a Black Republican, allegations that Trump’s recent event at Madison Square Garden catered to fascism, and an unfounded claim that Russia interferes with US elections.
Chanos backed President Biden throughout the 2020 election cycle, and, with one exception, all of his contributions to political candidates and parties recorded on OpenSecrets went to Democrats.
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In 2017, he stated that some of his greatest successful short sales came during Republican administrations, such as the crashes of Enron, Tyco, and WorldCom. While it is true that those companies collapsed while Republican President George W. Bush was in office, the accounting scandal that triggered Enron’s demise was built over years while Democrat Bill Clinton was in office, and some experts believe that lax leadership at the Securities and Exchange Commission (SEC) during his presidency contributed to massive damage incurred by Enron investors.
In other statements made in 2017 — Trump’s first year in office — Chanos cautioned that the US economy was in trouble. However, GDP growth in that year was 2.3%, compared to 1.5% in 2016. In 2017, the S&P 500 rose 20.8%.
Chanos is well-known in gaming circles
Chanos is well-known among investors who follow casino and sports betting stocks. In 2021, the founder of Kynikos Associates shorted DraftKings (NASDAQ: DKNG), triggering a scolding from co-founder and CEO Jason Robins.
That was the correct choice, since that stock and others like it fell precipitously in 2021. Chanos revised his mind about sports betting stocks last year, saying they were worth considering as long-term investments due to the lack of expertise among US bettors.
Chanos also held a short position in Wynn Resorts (NASDAQ: WYNN) in 2021. He retired last year.
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