Futures traders and sports books are setting overwhelming odds that the Illinois Democrat will win the presidency on Nov. 4.
Ladbrokes, a massive online sports book based in the United Kingdom, puts the odds of an Obama win at 1-10, meaning a bettor must risk $10 to win one more. John McCain, meanwhile, is an 11-2 shot, so a dollar posted on him would pay out an additional $5.50. The site now pays out less for a bet on Obama winning in a 370-plus electoral landslide than it does for a McCain victory of any margin.
Other books give the Arizona senator more favorable odds — Sportsbook.com has McCain at 4-to-1 — but across the board a bet for the Republican now pays off more than it has at any point during the general election, as bettors have soured on his prospects.
Paddy Power, Ireland's largest bookmaker, no longer gives McCain any chance at all, having called the election for Obama on Oct. 15 and paid out over a million pounds on bets for the Democrat, whose line had moved from 50-1 in May of 2005 to 1-9 when the book closed.
The wide spread between books — whose odds aren't intended to be predictive, but to split the action such that the house comes out ahead no matter who wins — stems from the relatively small size of the betting pool, which means they may not accurately represent expectations among the non-betting public.
Futures markets, in which buyers and sellers negotiate a price for a contract that pays off if a postulated event in fact occurs, are also down on McCain. An option that pays $1 should McCain win now sells for just 14 cents at Dublin-based futures market Intrade and 13 cents on the Iowa Electronic Market. Both prices are record lows.
Shortly after the Republican National Convention, McCain was a slight favorite in several markets, with a $1 option going for 54 cents on Intrade, and Ladbrokes giving the Republican 5-4 odds.
While polls show a snapshot in time of who voters want to win, betting lines and futures trades show who bettors think will win. The good news for McCain is that the gamblers have not always been right.
Just before the New Hampshire primary, Ladbrokes listed Obama as a prohibitive 1-33 shot to win, but he ended up losing that contest to Sen. Hillary Rodham Clinton.
Intrade CEO John Delaney concedes that the predictive value of his market has been "mixed" so far this year. "They were sometimes wrong during the primaries, but often showed better clarity than the polls," he said.
Trading volume on the site averages 10,000 trades a day of $1 million worth of presidential futures, up over 700 percent from 2004.
The still relatively small size of the presidential betting markets, though, has left them open to charges of manipulation. Nate Silver, founder of the widely read electoral projections Web site FiveThirtyEight, noticed in September that "something is going on over at Intrade with respect to the pricing of the Obama and McCain contracts," when Obama futures in September were priced about 10 points less than at other markets, "the equivalent of the Giants being 3-point favorites at the Bellagio Sportsbook, and 7-point favorites at the Mirage down the block."
An InTrade investigation found that one trader made repeated countercyclical buys of McCain futures large enough to raise their price — thus purchasing the options for considerably more than the same product would have cost on another market.
InTrade's numbers are now widely posted around the Web, and seen, along with poll numbers, as a reliable gauge of the candidates' prospects — meaning someone with deep pockets has good reason to bend the numbers, and thus the perception of the race.
At a posting on the InTrade site, Delaney reported that "an extensive investigation" found that the single investor responsible for the fluctuations was "using our markets in good faith and in the ordinary course of their business," and "using increased depth in these markets to manage certain risks," which he later told the New York Times could mean another "bookmaker using Intrade to hedge risk from their own customers.”
Still, the markets have historically been very accurate in general elections.
In 2004, futures traders at Intrade not only correctly priced President Bush to win, but also got the winner of each state right.
Americans are barred from participating in InTrade's presidential futures market, whose members are mostly from Europe and the Middle East, and which is currently priced to show Obama winning many crucial swing states, including North Carolina (where an option paying off $1 for an Obama win now costs 64 cents, Pennsylvania (88), Indiana (59), Ohio (75), Colorado (85), Missouri (64), Virginia (80) and Florida (66).
Iowa Business School professor Thomas Rietz, who runs the Iowa Electronic Market, said futures markets are "a lot less volatile than polls."
One reason is that "heavily partisan traders tend to hang onto contracts that they shouldn't," Rietz said. "Buy-and-hold traders buy candidates they like, [while] price setters and volatility comes from independents."
The market, which until 1996 was open only to students, operates as an educational tool, maintaining that status by capping traders at a $500 investment. It frequently operates at a loss.
Since its founding in 1988, Iowa has run two types of futures markets, a winner-take-all market for predicting the winner—which has successfully "predicted" the winner of each of all six presidential elections—and a market where participants bet on the percent of the popular vote each candidate will receive, which has been off by an average of just more than 1 percentage point. It currently shows Obama winning 54 percent of the popular vote.
Like polls, markets and betting lines tend to tighten as Election Day approaches.
Ladbrokes spokesman Seth Woods warned against overvaluing the predictive value of betting lines, recalling that in 2004, "Bush was the favorite for the vast majority of the campaign until 24 hours before Election Day, when Kerry became a marginal favorite. Kerry was as short as 1-3 on the day of the election."
BTW....Tech is a -6.5 point dog as of today.
Stranger things have happened
Ladbrokes, a massive online sports book based in the United Kingdom, puts the odds of an Obama win at 1-10, meaning a bettor must risk $10 to win one more. John McCain, meanwhile, is an 11-2 shot, so a dollar posted on him would pay out an additional $5.50. The site now pays out less for a bet on Obama winning in a 370-plus electoral landslide than it does for a McCain victory of any margin.
Other books give the Arizona senator more favorable odds — Sportsbook.com has McCain at 4-to-1 — but across the board a bet for the Republican now pays off more than it has at any point during the general election, as bettors have soured on his prospects.
Paddy Power, Ireland's largest bookmaker, no longer gives McCain any chance at all, having called the election for Obama on Oct. 15 and paid out over a million pounds on bets for the Democrat, whose line had moved from 50-1 in May of 2005 to 1-9 when the book closed.
The wide spread between books — whose odds aren't intended to be predictive, but to split the action such that the house comes out ahead no matter who wins — stems from the relatively small size of the betting pool, which means they may not accurately represent expectations among the non-betting public.
Futures markets, in which buyers and sellers negotiate a price for a contract that pays off if a postulated event in fact occurs, are also down on McCain. An option that pays $1 should McCain win now sells for just 14 cents at Dublin-based futures market Intrade and 13 cents on the Iowa Electronic Market. Both prices are record lows.
Shortly after the Republican National Convention, McCain was a slight favorite in several markets, with a $1 option going for 54 cents on Intrade, and Ladbrokes giving the Republican 5-4 odds.
While polls show a snapshot in time of who voters want to win, betting lines and futures trades show who bettors think will win. The good news for McCain is that the gamblers have not always been right.
Just before the New Hampshire primary, Ladbrokes listed Obama as a prohibitive 1-33 shot to win, but he ended up losing that contest to Sen. Hillary Rodham Clinton.
Intrade CEO John Delaney concedes that the predictive value of his market has been "mixed" so far this year. "They were sometimes wrong during the primaries, but often showed better clarity than the polls," he said.
Trading volume on the site averages 10,000 trades a day of $1 million worth of presidential futures, up over 700 percent from 2004.
The still relatively small size of the presidential betting markets, though, has left them open to charges of manipulation. Nate Silver, founder of the widely read electoral projections Web site FiveThirtyEight, noticed in September that "something is going on over at Intrade with respect to the pricing of the Obama and McCain contracts," when Obama futures in September were priced about 10 points less than at other markets, "the equivalent of the Giants being 3-point favorites at the Bellagio Sportsbook, and 7-point favorites at the Mirage down the block."
An InTrade investigation found that one trader made repeated countercyclical buys of McCain futures large enough to raise their price — thus purchasing the options for considerably more than the same product would have cost on another market.
InTrade's numbers are now widely posted around the Web, and seen, along with poll numbers, as a reliable gauge of the candidates' prospects — meaning someone with deep pockets has good reason to bend the numbers, and thus the perception of the race.
At a posting on the InTrade site, Delaney reported that "an extensive investigation" found that the single investor responsible for the fluctuations was "using our markets in good faith and in the ordinary course of their business," and "using increased depth in these markets to manage certain risks," which he later told the New York Times could mean another "bookmaker using Intrade to hedge risk from their own customers.”
Still, the markets have historically been very accurate in general elections.
In 2004, futures traders at Intrade not only correctly priced President Bush to win, but also got the winner of each state right.
Americans are barred from participating in InTrade's presidential futures market, whose members are mostly from Europe and the Middle East, and which is currently priced to show Obama winning many crucial swing states, including North Carolina (where an option paying off $1 for an Obama win now costs 64 cents, Pennsylvania (88), Indiana (59), Ohio (75), Colorado (85), Missouri (64), Virginia (80) and Florida (66).
Iowa Business School professor Thomas Rietz, who runs the Iowa Electronic Market, said futures markets are "a lot less volatile than polls."
One reason is that "heavily partisan traders tend to hang onto contracts that they shouldn't," Rietz said. "Buy-and-hold traders buy candidates they like, [while] price setters and volatility comes from independents."
The market, which until 1996 was open only to students, operates as an educational tool, maintaining that status by capping traders at a $500 investment. It frequently operates at a loss.
Since its founding in 1988, Iowa has run two types of futures markets, a winner-take-all market for predicting the winner—which has successfully "predicted" the winner of each of all six presidential elections—and a market where participants bet on the percent of the popular vote each candidate will receive, which has been off by an average of just more than 1 percentage point. It currently shows Obama winning 54 percent of the popular vote.
Like polls, markets and betting lines tend to tighten as Election Day approaches.
Ladbrokes spokesman Seth Woods warned against overvaluing the predictive value of betting lines, recalling that in 2004, "Bush was the favorite for the vast majority of the campaign until 24 hours before Election Day, when Kerry became a marginal favorite. Kerry was as short as 1-3 on the day of the election."
BTW....Tech is a -6.5 point dog as of today.
Stranger things have happened
6 comments:
I believe that odds are true when it comes to things of popular interest. Many people believe that Obama is going to win office including myself and I would vote for his odds that he has to make one dollar. But you never know I might even throw a couple bucks to McCain because strange things do happen and McCain just might get that upper hand and win. But just like playing poker you only truly know what you have in your hands and you have only guesses of what might come up so who knows.
well i cant say I know a whole lot about these betting schemes around the world but what I do know is that even if Obama does win the popular vote there is still a possibility that he wont win the election. We have seen strange things happen in past presidential elections so we all shouldnt get our panties in a bunch if we turn out wrong. I support Obama, but I never celebrate until the fat lady sings. oh yeah, theres no way tech is going to lose on Saturday. Do not forget to wear ur blackout t-shirts on gameday. One more thing, I will be there with gameday saturday morning, so tune into ESPN everybody!
Gambling on presidential prospects fails to have the same flavor as betting on other things, most likely because of the overwhelming coverage the former gets. I guess this fails to be a get-rich-quick scheme, primarily becuase of the lack of chance. There are just too many polls out there, dependent on the people that vote for the candidate anyway. Upsets are less probable, and the control is left in the hand of the voters, not in the heart of the candidates.
But the fact that groups actually monitor something like this is commendable. It's nice to see the world of the stereotypical ignorant sports fan meet with the world of the sterotypical arrogant, educated politician.
I too do agree with what shababsiddiqui4 said...Presidential gambling isn't as tasteful as any other gambling because media and propaganda often shifts a person's choice. And as for the actual election, I think things are looking pretty dim for McCain and I have full confidence that Barack Obama will be our new presisdent, But as the article stated the polls werent always right like with Hillary and Obama at the Beginning. And the fact that Kerry became a majority fsvorite 24-hours-before election may be a possibility for McCain but that already has a very slim chance.
I beleive taht Obama is going to become the next president of the United States. If I could I would probably bet as much money on him as I could.
even though the odds against McCain is highly unfavorable, a chance is still a chance, until election day, the votes can still change. the bettings of many of these websites and places are indicating that McCain will lose by a large margin, but if a surprise comes, the ones who placed their luck on McCain will get a great return.
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