Gambling on Sanity in D.C.: ACE Lets You Bet on When Shutdown Will End

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Great news! According to The New York Times , negotiations between Republican leaders in Congress and the White House are bearing fruit.

Friday afternoon, a delegation of Senate Republicans emerged from the White House talking up the possibility that a deal to end the federal government shutdown and raise America's debt ceiling could happen soon. After a weekend's hard negotiating, Sen. Bon Corker (R-Tenn.) went on MSNBC this morning to predict a solution to the impasse "over the next few days."

Knowledgeable sources say the plan would give the government enough money to operate through the end of January, and perhaps as far out as March. All that remains now, say the senators, is to "put the words into action and get this resolved."

But will they get it done?

'Invest' in America's Future

The latest verdict is: Maybe, possibly ... yes.

At least, that's what we hear from the number crunchers at, an innovative project from the American Civics Exchange that aims to apply Wall Street-style stockpicking to the politics of the nation.

Billing itself as "the first US-based commercial market for political futures," the American Civics Exchange aims to create a financial marketplace where investors can literally invest themselves in public policy, by buying and selling "shares" of likely developments in Washington:

  • Changes in tax policy

  • Enactment of proposed legislation

  • Issuance of regulatory decisions

  • Outcomes of major litigation

This week, the topic du jour is, of course, the odds of congressional leaders coming to their senses and ending the government shutdown. And, with the nation set ram itself headfirst into the debt ceiling on Oct. 17, the hope is that a solution to both issues will be found before the deadline. But so far, things have not been going well.

Shut Down and Wiped Out

Multiple virtual "futures contracts" traded on the ACE website -- bets that the government shutdown would end within either one, two, three, or seven days -- have all closed as total losses, their investors wiped out entirely. A contract betting on a resolution to the crisis within one to two weeks is about to expire with a total loss as well.

As of today, folks are still weighing -- and investing in -- the odds of a resolution appearing within either:

  • Two weeks to one month" from the date the shutdown began (so, through Nov. 1)

  • One to two months

  • Or more than two months

That's the bad news. The good news is that investors are starting to believe that there might be something to all the happy-talk coming out of Washington.

%VIRTUAL-article-sponsoredlinks%Rebounding from weakness over the weekend, ACE trading platform today shows rising odds that the shutdown will get resolved in relatively short order. Futures contracts betting on the crisis ending before the month is out spiked 7.9 percent this morning, to $77.50. Conversely, the price of a contract predicting the shutdown will last from one-to-two months plummeted 29.5 percent, to $26.10.

Result: As of today, ACE is showing it's about 3 times more likely that the government will end the shutdown in October, as it is that this crisis will last into November.

What Does It Mean to You?

Now, does this mean it's a hard and fast fact that the U.S. government will fix its problems in the next few days, avoid a default, and send workers back in to the office before the week is out? Not necessarily.

Investors -- on the real stock market as well as in the political market that ACE has set up -- make bad calls all the time. Case in point: Six months ago, investors thought Blackberry (BBRY) was worth more than $16 a share. Today, it sells for half that. And as you can see on the ACE website, the trail towards today's happy prediction is already littered with the expired bets of earlier optimists, who lost their "investments" as the government dithered.

But what ACE's virtual market for political futures does tell us is that a lot of voters just like you think Washington will indeed come to its senses, end the shutdown, and get back to work. And they're willing to put their money where their mouths are.

Here's hoping they're right.

Motley Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

Originally published