A Betting Man With a Plan for America

That was then. Mr. Yass, 64, who says he once “ruined a lot of dinner parties,” now finds his opinions more in demand, thanks to his emergence as Pennsylvania’s richest person and its biggest political donor. He’s been climbing the ranks nationally too, including as a strong backer of Florida Gov.

Ron DeSantis.

What really gets the entertaining and convivial Mr. Yass going, I find, is his belief that he can help deliver America through its rough patch with two big ideas—betting markets and school choice. How he thinks about these might surprise you.

We’re chatting at his suburban Philadelphia home—artsy, but not opulent by billionaire standards. If his name rings any bells, he was recently singled out, along with

Amazon

founder

Jeff Bezos

and serial entrepreneur

Peter Thiel,

for a ProPublica exposé based on tax records likely stolen from the Internal Revenue Service. Has the U.S. government reached out to say how sorry it is? No, but “I’m hoping it’s high on their priority list,” Mr. Yass says in a manner that doesn’t convey great confidence.

For a previous bout of publicity, go back to 1985, when he and his partners, still in their 20s, figured out how to improve the odds of certain complicated bets offered by horse-racing tracks. Example: By spreading $60,000 across enough permutations of a “Super Bet” at an Illinois track, they hit the jackpot and walked away with $764,284.

The tracks banned them. They sued, unsuccessfully. The story made the papers nationally.

The same fascination with odds and risk pricing would later become the foundation of Susquehanna’s lucrative trading business, a $40 billion stake in the Chinese company that owns TikTok, and a systematic foray into the sports betting business.

Mr. Yass says he loves sports betting because “it’s fun.” Two of his kids work in the business. But he also has a bigger plan, using betting markets to improve our political debate and policy outcomes. Two areas where he sees the need most urgently: war and climate policy.

On so many questions important to the public, predictions and forecasts are thrown around with little accountability. He points to the Lincoln War Department’s turning away of volunteers in 1861, saying the war would be short. Some 160 years later,

Bush White

House economist

Lawrence Lindsey

would be taken to the woodshed for predicting the Iraq War might cost $50 billion. (The actual cost turned out to be over $1 trillion.)

Asks Mr. Yass: If betting markets had anticipated even $500 billion, “would we have gone to war in Iraq?” With a more realistic view of the Civil War’s costs, wouldn’t Lincoln’s supporters have plumped for proposals to buy every enslaved American’s freedom instead?

On climate, the science remains iffy and frequently misrepresented in public debate. This is where betting markets could help. Think about insurers, fund managers and speculators with real skin in the game. Think about liquid markets where they could match wits and distill a best guess about future temperature and climate trends. “If we were able to get those prices out there, we can stop the nonsense of the world and the climate change hysterical people, and have a rational conversation,” Mr. Yass says.

He’s hardly alone in recognizing the power of prediction markets to improve policy. The idea has garnered legions of academic fans. Then politicians would have to explain why their promises are at variance with investor expectations. Journalists would have a powerful new tool against which to test partisan arguments and hold leaders to account.

“Nobody says they ‘know’ who will win a football game,” Mr. Yass points out; all understand it’s a matter of probabilities. Bringing the power of prediction markets and disciplined odds-making into the political and policy arena—“that, I think, would be the greatest gift to society.”

Unfortunately a roadblock is the Commodity Futures Trading Commission, which frowns on prediction markets tied to political outcomes. This week the agency is in the process of yanking its support from a noticeably accurate experiment, the eight-year-old PredictIt market, sponsored by a New Zealand university.

Limited to bets of $850 and hardly suitable for big-money hedging, the market still yielded what Mr. Yass calls “tremendous information” on political outcomes. At Susquehanna, “we used it all the time.” When price information is “so valuable,” he adds, the government should be encouraging it rather than shutting it down.

The CFTC did approve a Susquehanna-sponsored instrument to bet on future changes in the corporate income-tax rate. Another group, KalshiEx, is seeking approval to offer $25,000 bets on which party will control Congress, never mind the CFTC’s history of indicating that such bets somehow don’t serve an “economic purpose.”

In Europe, big-dollar betting on U.S. elections is legal and has proved a useful and accurate barometer. Bloomberg News reported in October 2020 that Susquehanna, via licensed London betting platforms, had offered to cover bets up to $100 million on the U.S. presidential election. As Mr. Yass tells the story, even a month after Election Day, “crazy people” were eager to wager, against 10% odds, that

Donald Trump

would remain president. “The betting got gigantic. We thought there’s no way the election is being overturned. We bet $500 million to win $50 million.”

The information contained in prices is also part of his case for school choice, the passion behind most of his political giving. Mr. Yass poured $12 million into the failed bids of liberal Democratic state Sen.

Anthony Williams

for Pennsylvania governor and Philadelphia mayor. A quandary now is GOP gubernatorial candidate

Doug Mastriano,

whom Mr. Yass previously failed to prod out of the race. Mr. Mastriano may be ultra-Trumpy and an election denier, but the retired Army colonel is strong on school choice.

Think about it this way, Mr. Yass says: In New York City, which spends $35,000 a year per child, a mother of three in effect has a claim on the city for $1.2 million over 12 years.

With this money in her pocket, is it plausible she couldn’t find a better education for her kids at a charter school or religious school and still have a bundle left over?

Is it plausible the local public school wouldn’t also improve for a chance to get a piece of this money and stay in business?

“She’s not poor anymore. She’d get a much better education for her kids,” Mr. Yass says. “But that self-serving teachers union comes in and grabs that $1.2 million out of her hands.”

It bugs him that so many Democrats won’t buck the teachers unions.

Elizabeth Warren,

as a private citizen, wrote a book touting school choice.

Hillary Clinton

has spoken favorably of charter schools. Yet even with his deep pockets, Mr. Yass can’t outbid the unions when they promise to be around for a politician’s entire career.

He muses about a

Charles Barkley

or

Oprah Winfrey

getting behind the movement, but until that happens he sees no alternative to bankrolling politicians willing to break ranks with the unions. For once he ignores the odds: “No matter how low the probability, it’s worth doing.”

Mr. Yass, ecumenical with his money and his vote, remains a registered Libertarian and longtime member of the Cato Institute board. He argues that history’s “libertarian arc” is manifested in the advance of gay rights as well as the $50 trillion valuation of America’s corporate sector, dwarfing China’s or Europe’s.

But if the odds in favor of liberty and progress are 51 to 49 on any given day, that leaves room for long runs of bad outcomes. Worryingly, a wave of destructive ideology is emanating from America’s universities. Young people are being encouraged to hate the capitalism and free markets that gave them their opportunity-rich lives. And renominating Donald Trump isn’t the answer.

A Never Trumper in 2016, the Bronx-born Mr. Yass later found himself pitching school choice to a fellow product of New York’s outer boroughs: “Jared, let’s go do this,” he imitates the 45th president barking to son-in-law and adviser

Jared Kushner.

But Mr. Trump has become the Democrats’ “most valuable player.” Mr. Yass and allies have been noodling how to discourage a 2024 bid: “He doesn’t have any donors. He doesn’t need the money. He gets so much free publicity. It’s not like you can influence him at all. The only thing you can appeal to is, ‘You’re gonna lose and be humiliated.’ ”

Mr. Yass is instead throwing his weight behind the rising Mr. DeSantis, who eked out his 2018 Florida victory with help from black moms who wanted options for their kids. The Florida governor is a “little gruff” and “not a libertarian” but good on school choice and the best bet “if you’ve had enough of the political warfare,” Mr. Yass says.

As the megadonor sees it, a vote for

Joe Biden

or any likely Democrat in 2024 is a vote for Mr. Trump, so great is the Democratic interest in keeping Trumpism at center stage. That’s the last thing a President DeSantis would want. “What I would say to my liberal friends is, if you think Trump’s the worst human being in the world, then if Biden wins, it’s still World War III. If a reasonable Republican wins, it would bring normalcy.”

Of course, some people want a war, whose cost they will certainly underestimate.

Mr. Jenkins, a member of the Journal’s editorial board, writes the Business World column.