Checking In On Intrade - Is Romney Undervalued?

In the past, I have written about my curiosity*-driven interest in prediction markets. Anyone who has spent any time looking into prediction markets will know that this mostly means Intrade. For those who are less familiar with prediction markets, they are simply media (of which Intrade is the most popular) for placing bets on the outcomes of events. These are bets can be on many things, but the events most commonly seem to be political or scientific, or perhaps technological, in nature.

I checked in on Intrade last night to see what the latest on the US presidential election was. How did this week's debate impact things? Did the VP debate last week stimulate any movement? How about Mitt Romney's historic win a few weeks ago? How would the latest poll numbers be reflected?

To my surprise, it seems that none of these data points have been accounted for; Mitt Romney to win is only getting odds of about 37%. Most polls right now, within a fairly tight margin of error in most cases, show the race as a dead heat. After Romney's debate victory (and near draw in the second debate) some polls even show the challenger has a chance to win, yet the odds of him winning on Intrade are only 37%. Why might this be? After all, those who place bets on Intrade have real money at stake.

I have a few guesses, but no definitive answers. My best guess is that Obama to win is being supported by some people who, breaking from the old adage, are betting with their hearts. I guess inherent in this is an idea that more Obama supporters than Romney supports are on Intrade, not a shocking notion given the age correlation between those who support the incumbent and those who might feel comfortable playing prediction markets online.

Another idea, somewhat related to that above, is that the foreign-based Intrade's prohibition on accepting US originated credit cards to fund accounts has led to more punters being outside than within the US. Anecdotally, Obama seems to be more popular abroad than Romney, so maybe in a variation of the betting with the heart theme, or perhaps due to a lack of insight, foreigners are betting Obama's odds up.

Maybe it has nothing to do with candidate support; maybe Intrade users are really the smartest guys in the room and know something salacious about Mr. Romney, or something positive about President Obama, that hasn't yet been reflected in the polls. On second thought, I think I will stick with the ideas above. If there were a skeleton in Romney's closet, or if the President had the secret sauce on, say, the economy, I am sure we would have heard all about it in a campaign ad by now...

Whatever it is, it appears that Romney for the win is an undervalued bet right now. This should provide a great opportunity for Romney supporters to put their money where their mouths are and go for the double win. As for Obama supporters, this could act as a hedge on their hopes. Either they watch their candidate win, or they watch him lose, whether they bet or not. However if the latter scenario plays out and they have a bet in place, their sinking feelings will at least be paired with some extra cash with which they can subsequently drown their sorrows...

* rather than pecuniarily...


  1. "Voting from the heart" is something both parties do regularly. Why would you imagine this practice is the sole domain of Obama supporters? And how would you know whether or not any particular voter is voting "from the heart" or "from the head", much less a bunch of them on a business site like Intrade?

    Your theory that more Obama apologists use Intrade has no real basis. Also, you'd have to also explain why virtually all other trade sites show about a 2:1 confidence in Obama winning the election, as well. Is it all just a conspiracy?

    It's not hard to imagine there are plenty of young and old conservatives that are business minded and use the web, but haven't bet on Romney because Romney will have to put out multiple fires in swing states to tie with the incumbent, never mind winning, and the incumbent almost always wins presidential re-election.

    Also, looking at the math, Romney is significantly behind in points for winning the electoral college. Plus he's winning the popular vote. Finally, most national polls aren't taking into account the exclusion of cell phone users - a population of likely voters that are overwhelmingly supporters of President Obama. Wait ... this makes me want to put money on President Obama ;)

  2. Just some clarification as it regards my last paragraph (above): "He", as in the guy who's "winning the popular vote", is President Obama, not Romney.

  3. Thanks for stopping by, and thanks for the comments.

    The post itself was informational up to the point that I started with the 'baseless' analysis...I went about half serious/half tongue in cheek after that. That said, you make some interesting points, and I would say that if Romney supporters are voting with their hearts on Intrade as well, he is in a lot more trouble than some polls indicate...

    I also think the Obama campaign has some fires to put out as well, and things like be a little tougher for him than you have indicated. However if you really believe they aren't, and you are right about Obama's odds, you are correct in thinking that that a bet is a good idea.

    Either Obama wins and you gain the double win of the bet and your candidate winning, or else if you are a Romney supporter, you have the pocket money with which to drown your sorrows as discussed in the original post. Not a bad outcome for a few bucks down...


  4. It's November 7th. I would say Anonymous was fully vindicated by the events of Election Day.