Campaigns/Elections

Wanna Bet?

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Want to track political futures markets for 2008, but too lazy to click your mouse three times? Slate has the solution:

If a single prediction market is wiser than the pundits and the polls, imagine how wise all the prediction markets are together. That's the idea behind Slate's "Political Futures," which offers a comprehensive guide to all the big political prediction markets. From now until Election Day 2008, we'll publish regular updates of the key data from Iowa Electronic Markets, Intrade.com, and Casualobserver.net.

Arbitrage opportunities are sure to abound. Good luck.

More on my love-hate relationship with political futures markets here.

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  1. Ron Paul has been discluded again!

  2. Paul’s disclusion is totally unrespectful.

  3. Kind of suprised the Dems are trading so high to win the White House. Right now their two leading canidates are a woman most Americans despise and a black guy. I’m not bothered so much by Paul’s junk status in this market, because I can’t imagine even his supporters think he’s going to win, but how the heck does Mike Huckabee trade at $2 something?

  4. Just don’t tell Congress about this. The only question is whether they’d ban it because it’s Internet gambling or because it’s political speech.

  5. I’m not much of a speculator. Do any of the candidates pay a solid dividend? Is there an index fund that gives me broad exposure to the political market?

  6. The Iowa market did a terrible job at predicting the 2006 midterm election. It had the Republicans winning the senate at 2:1 or higher, right up to the wire, and a very low estimate of the net Dem pickup in the house. It was off by more than the various polls. There were enough Republican fanboys making sucker’s bets to distort the market.

  7. Is there an index fund that gives me broad exposure to the political market?

    I sure K Street could put something together for you, but watch those administrative fees.

  8. They aren’t tracking TradeSports.com?

    Idiots.

  9. LarryA, the Iowa market is legal as a form of research. It wouldn’t actually be gambling, but it is a form of security. Without an exception granted by Congress, they would be operating in violation of SEC rules.

  10. I’m confused. If the Republicans winning the Senate was at 2:1 odds, doesn’t that mean the Republicans were underdogs at winning the Senate? The converse would be that the Democrats were at 1:2 odds, which would mean you would have to bet $2 to win $1 that the Democrats would win, which seems reasonable considering the result.

  11. The Iowa market did a terrible job at predicting the 2006 midterm election. It had the Republicans winning the senate at 2:1 or higher, right up to the wire

    What evidence do you have that this was not a fair price?

    The argument that goes

    1. GOP priced at 67% to hold Senate
    2. GOP loses Senate
    3. Therefore market was wrong

    is entirely fallacious in the same way as if I argued about the Super Bowl props market

    1. Colts priced at 50% to win coin toss
    2. Colts lost coin toss
    3. Therefore market was wrong

  12. If the Republicans winning the Senate was at 2:1 odds, doesn’t that mean the Republicans were underdogs at winning the Senate?

    jf, no, he meant the price of the GOP Senate contract reflected the market’s opinion that there was about a 67% chance of the GOP retaining control. For example, at Tradsports it was similar (as would be expected) and $10 GOP Senate contracts were trading in the $6 to $7 range most the time.

  13. TPG: “They aren’t tracking TradeSports.com?”

    Intrade.com and TradeSports.com split with TradeSports handling sports futures and Intrade handling all other futures.

  14. Without an exception granted by Congress, they would be operating in violation of SEC rules.

    Yeah, but the SEC has twice given the IEM a notice of nonintention to prosecute (or act, or whatever). Basically, if what they’re doing is illegal, no one in gov’t cares enough to go after them, and this is openly acknowledged by the would-be enforcers.

  15. Yeah, InTrade (still based in Ireland) is trying to get approved by the Feds as a legal commodities and futures exchange, so they’ve spun off TradeSports (which is now based in the Netherlands Antilles (probably Curacao)).

    The line on any event will occasionally be way off. Even in massive turnover events like the Super Bowl or the World Cup final (both of which generate billions of dollars worth of trading worldwide), the market’s opinion can be massively wrong. Hell, the market was definitely not pricing properly the default risk of various mortgage-backed securities until fairly recently (and there’s many economists and traders who would argue that that risk is still not priced in). The fact that the release of economic numbers is enough to consistently move the markets is still more evidence that prices are not perfect, because even taken together, the opinions of all participants are not all-encompassing (if the market was perfect, there would not be any significant move associated with the publication of new information, since the market will have already priced it in).

  16. Is it just me or is Richardson priced a little too low?

    Governors > Senators.

  17. Actually the market priced correctly if you take arbitragers into account. Republicans needed to win 2 of the 6 tight races to maintain control of the Senate. Even if the odds in those tight races was 55-45 in favor of the Dems, the odds of them winning 5 gets low. Obviously, they won the ones they needed to. However, the existence of an arbitrage would get wiped out by speculators.

  18. The fact that the release of economic numbers is enough to consistently move the markets is still more evidence that prices are not perfect

    If the economic numbers contain information that the market participants could not have known ahead of time, then their response to the release is evidence that the market does make use of all available information, not vice versa.

  19. prices are not perfect

    Nobody said they were perfect. Just better than the alternative.

  20. Bah. Stick with Readabet for this kind of information.
    http://readabet.bestbetting.com/Default.aspx?market=13926104

  21. prices being inaccurate are profit opportunities. Why are you complaining about the market being off. Put you money where your mouth is and make money. If the GOP senate contract was overvalued why didn’t you sell it. Or did you only conclude it was wrong after the election? The market shows the conventional wisdom. if you disagree profit from it and hope for more opportunities in the future

  22. I’ve never understood analysis of the market as “right” when the option it values at more than $0.50 (for a $1.00 contract) wins and “wrong” when when something valued less than that wins. If the markets were reliably “correct” in that sense they’d actually be deeply screwed up: if anything valued at more than $0.50 reliably wins, the traders should be should buying as much of it as they can, so any $1.00 contract should always be valued at $1.00 or $0.00. Otherwise the traders would be throwing away opportunities for profit.

    It makes much more sense to say that markets are “correct” if prices reliably correspond to the true probability of a given result. To analyze that you need to do some kind of statistical analysis over many outcomes. If the markets value a certain outcome at $0.67, the outcome should happen 2 times out of 3. The fact that the contract doesn’t pay out 1 time out of 3 isn’t evidence that the markets are wrong, but that they’re right, because they’re coming up with a good estimate of the probability.

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