Tuesday, November 02, 2004

Iowa Electronic Markets ~ Current Markets: 2004 US Presidential Winner Takes All Market

Iowa Electronic Markets ~ Current Markets: 2004 US Presidential Winner Takes All Market

For many reasons polls can be biased and inaccurate. For instance: do you answer your phone? I rarely do unless I know who is calling. Or do you tell the pollster what you thing they want to hear? Many do.

However, people are much less likely to lie if there is money at stake, so it is worthwhile to see what the markets telling us about the US presidential election?

No, I am not talking about the stock markets, the bond markets, or even the currency markets, but the political markets and the betting markets!

The most famous of the political markets is the Iowa Electronic Market. It has been around for years and has done a good job at predicting winners. Right now it has Bush ahead but barely.

Betting markets such as off-shore Casinos have also entered this year's election process. At many of these you can bet on not only who is going to win, but even who is going to win various states.

MSNBC did a story (including a video) on these betting sites two weeks ago:

"'The odds on our site react to the latest news event immediately, and so in terms of the reliability of our election data we think we are way ahead of the opinion polls which only tend to survey a few thousand people,' said Mike Knesevitch, a spokesperson for Tradesports.com."
Oddschecker.com has complied a list of the various betting markets that are quoting odds. It is fascinating to watch them move as news changes etc. For most of the day the line has been moving towards Kerry.

Now be forewarned, liquidity is not great at all of these so there is some noise in the predictions, but at the end of the day, my money is still on the efficiency of the financial markets.

Jim Garven has done a much more thorough study of the political markets on a state by state basis and as of the last post on his blog thinks the markets are now saying a Kerry victory. But again it is so close it is very hard to say.

An other site that has had predictions on the election is:

Also as a reminder, before you go jumping form windows or moving because your candidate lost, remember, John Nofsinger's finding that stock market performance is essentially the same for Republican and Democratic presidencies.

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