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2008 US elections betting is well under way and more unpredictable than ever imagined. Just a few days ago, Republican Mike Huckabee had come from out of nowhere to win in Iowa. The celebration was short-lived, however, as Senator John McCain's campaign was suddenly resurrected after being left for dead just a few months ago. He took New Hampshire. Mitt Romney may not be winning anywhere (except for Wyoming), but he's been the most consistent in the Republican race thus far, taking the silver in both Iowa and New Hampshire. But the biggest shock thus far - oddly enough - has been Hillary Clinton. She defied polls on Tuesday (some of which had her trailing Senator Barack Obama) by winning New Hampshire on the Democratic side. Obama came in a respectable second here. Nobody predicted this one even though just a few weeks ago, nobody thought Clinton could be beaten (and she was handily in Iowa last week). As more and more is wagered on these primaries and the ultimate prize, the US Presidency, the oddsmakers are becoming much more accurate. Forget the foreign exchanges that do not accurately mirror the actual sentiment of American voters. While Irish-based websites the likes of Paddy Power and Intrade had 91% of its customers betting that Barack Obama would win New Hampshire, real Americans were gambling at sites the likes of BetUS.com, which had Hillary Clinton and Barack Obama in a dead heat to win the state. BetUS.com had removed the New Hampshire primaries odds just prior to scenes of Hillary nearly shedding a tear. BetFair, a European betting exchange, had Hillary with 50/1 odds of winning in New Hampshire. But BetFair does not accept US customers and therefore can not be an accurate predictor of US elections. Nevertheless, if you can get these candidates at such long odds living outside the US, it's worth a shot. This was, after all, incredible value. Long term, immediately following the Iowa Caucuses, Barack Obama was instilled as a favorite to become the next President of the United States, however, Hillary Clinton's odds were still slightly shorter. A $100 bet on Obama would pay out approximately $180 compared to Hillary Clinton paying out $120. Gamblers already had John McCain pegged to become the Republican GOP. The original favorite when odds first opened, McCain had lost some steam at Sportsbook.com but now he was back in the driver's seat even before taking New Hampshire. John McCain's 7-2 odds would pay out $350 for every $100 bet compared to Rudy Giuliani's and Mike Huckabee's 8/1 odds paying out $800 for every $100 bet. Mitt Romney has been consistent with the oddsmakers as he has been in the primaries but his odds were set at 10/1 of becoming the next US President compared to 8/1 previously. The Evolution of Presidential Betting Odds Prediction markets actually have a long and colorful lineage. Betting on elections was common in the U.S. until at least the 1940s, with formal markets existing on Wall Street in the months leading up to the race. Newspapers reported market conditions to give a sense of the closeness of the contest in this period prior to widespread polling. The markets involved thousands of participants, had millions of dollars in volume in current terms, and had remarkable predictive accuracy. The 2004 US Presidential elections were the most bet on nonsporting event ever recorded with millions of dollars bet and some online gambling establishments taking in a cool million on Election Day alone. Manipulations and speculations do occur. There can also be direct attempts to manipulate such markets. In the Tradesports 2004 presidential markets there was an apparent manipulation effort. An anonymous trader sold short so many Bush 2004 presidential futures contracts that the price was driven to zero, implying a zero percent chance that Bush would win. The only rational purpose of such a trade would be an attempt to manipulate the market in a strategy called a "bear raid". If this was a deliberate manipulation effort it failed, however, as the price of the contract rebounded rapidly to its previous level. Just prior to the latest primaries and caucuses, Republican Ron Paul's support base bet heavily on its candidate. Paul peaked at 6/1 odds this fall as a result. Prior to the Ron Paul Internet phenomenon, the only viable candidates worth betting were Hillary Clinton and John McCain for the most part. As such, both candidates opened as favorites. The Ron Paul betting was based more on speculative bubbles as opposed to any form of manipulation. One of the most intriguing and incredibly accurate prediction markets came with the Ron Paul one day money drive back on December 16, whereby oddsmakers at Sportsbook.com and Bookmaker.com both featured an OVER/UNDER line on how much money would ultimately be raised during that day. The line eventually settled in at $6 million with the OVER having a slight favorite. Amazingly, the Ron Paul campaign ended up taking in $6.2 million. What's more interesting is that the folks from Sportsbook.com had never offered such a betting option and were at first a bit uneducated as to the amount that could potentially be generated. At first, Sportsbook.com's David Stanley consulted with Gambling911.com. "What are we looking at here?" he asked. Based on a previous one day money drive that took in just over $4 million the month before, and the idea that some of Ron Paul's supporters might have already given their top amounts during that time, a number of $5 million was arrived at. Paul supporters immediately balked at the number, suggesting it could be double the amount. As a result there was heavy betting on the OVER once the line opened and Sportsbook immediately adjusted it to the $6 million where betting action was dispersed more evenly between the OVER and UNDER. As the primaries neared, more individuals began betting on the candidates they believed stood the best chance of winning, thus adjusting the market. Bets began to roll in on Mike Huckabee (which they had not previously). Heading into both the Iowa caucuses and New Hampshire primaries, the odds were quite accurate with the noted exception of Hillary Clinton's upset victory in New Hampshire, in which the European gaming firms (i.e. BetFair, Paddy Power, Intrade) were especially way off. But what follows are some interesting observations: Despite the fact that Senator Barack Obama beat Hillary Clinton hands down last week in Iowa, Hillary Clinton remained the 6/5 favorite at Sportsbook.com to become the next US President. The payout would be approximately $180 for every $100 bet. Compare that to Barack Obama who would pay $450 for every $100 bet. Hillary has remained the favorite throughout the campaign. The odds reflected this and there was little reaction in this arena to news that the Clinton campaign might have to be retooled or - worse - that it was done. And while Obama made headlines last week, his odds of winning the election barely changed between Iowa and New Hampshire. Gamblers still felt confident that Hillary would win in the long run while the betting action kept things tight for the New Hampshire primaries betting where both candidates were very close favorites (unlike polls where Obama was seen winning by double digits). John Edwards has remained consistently around 15/1 odds of winning the election. An interesting factor that continues to play a pivotal role in the Democratic race is that Al Gore odds are still being offered - in some cases, in the single digits like Sportsbook.com where he is listed at 5/1. Michigan Primaries Odds Oddsmakers already had Senator John McCain pegged to win Michigan before his big victory in New Hampshire.
In Michigan, it was
an all out fight
between McCain, Mitt
Romney and Rudy
Giuliani. The later
two both had early
odds of +200 (for a
potential payout of
$200 for every $100
bet). McCain would
pay $140 for every
$100 bet, making him
the slight favorite. ---- Christopher Costigan, Gambling911.com Publisher CCostigan@CostiganMedia.com
Originally published
January 9, 2008
10:38 am EST
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2008
US Elections Betting