Looking for Sure Political Bets at Online Prediction Market

An interesting article about how the political betting sites aren't always accurate (but in the case of Obama being the nominee, currently 72% at the Iowa Electronic Markets (http://iemweb.biz.uiowa.edu/quotes/Nomination08_quotes.html), I think that's about right):

Intrade has done an excellent job of predicting election results over the last few years. In 2004, President Bush won every state in which Intrade's contracts — as of the night before Election Day — gave him a better than 50 percent chance of winning. He lost every state where the traders thought Mr. Kerry was the favorite. Late on election night in 2006, while the talking heads on CNN and MSNBC were still saying that the Republicans would hold onto the Senate, Intrade knew better.

It's no wonder, then, that the site has become a phenomenon. In recent months, when I have asked former advisers to Mr. Bush or Bill Clinton what they think will happen in 2008, they've often talked about Intrade. The Wall Street Journal and The Financial Times run regular online features based on the odds. Journalists — me included — have praised Intrade as a miniature version of the stock market, where the collective wisdom of the masses reveals a larger truth.

But now a little backlash has begun. Barry Ritholtz, author of the popular Big Picture economics blog, has put together a list of Intrade's misses. Last Tuesday, meanwhile, I e-mailed a high-profile Democratic economist and asked what he made of the dueling numbers coming from the California polls and from Intrade. He replied with a salty message, dismissing the usefulness of Intrade. Then there is Mr. Ravitch, a 27-year-old lawyer turned poker player whose previous claim to fame was his role in exposing an online-poker cheating scandal. In late December, he started posting notes on an Internet message board vowing to profit from what he saw as Intrade's blatant inefficiencies. He has generally been announcing his trades as he makes them, and most of them have paid off. In the span of just six weeks, he says, he has earned a 35 percent return.

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February 13, 2008

Economic Scene

Looking for Sure Political Bets at Online Prediction Market

By DAVID LEONHARDT

www.nytimes.com/2008/02/13/business/13leonhardt.html

There is a professional poker player in Queens named Serge Ravitch who is convinced that he can make money off this year's presidential election. But to explain what he's up to, I want to start with a story about last week's Democratic primary in California.