Count the Intrade.com political futures market among the winners of the 2012 election, along with blogger and statistician Nate Silver.
The BGOV Barometer shows Intrade betting on election eve came close to predicting the electoral vote in the presidential race as well as the outcome of competitive races for the U.S. Senate.
The results burnish the reputation of Intrade and Silver as election prognosticators after both gained prominence in 2008 by offering predictions that closely mirrored the eventual result. Intrade betting the night before the Nov. 6 balloting showed President Barack Obama a 2-to-1 favorite to win re-election over Republican challenger Mitt Romney.
“Overall they did pretty well,” Julian Zelizer, a Princeton University professor of history and public affairs, said of Intrade’s predictions. “But that said, they were just following the conventional wisdom, which said at a certain point the electoral mass favored Obama.”
Intrade betting called every state correctly with the possible exception of Florida, where votes were close enough that they were still being counted late yesterday. Nov. 5 wagers had given Romney a 70.2 percent chance of winning the state’s 29 electoral votes.
Silver correctly predicted Obama’s nationwide victory and, if Florida goes for the president, will have called all 50 U.S. states on his FiveThirtyEight blog, published by the New York Times.
Intrade correctly called eight out of 10 Senate contests it dubbed “key races,” missing in North Dakota and Montana. In North Dakota, where Intrade gave the Republican candidate an 87 percent chance of winning, Democrat Heidi Heitkamp, a former state attorney general, defeated Republican U.S. Representative Rick Berg in a race that took until yesterday to call. In Montana, Democratic U.S. Senator Jon Tester held on to his seat with 48.8 percent of the vote to defeat Republican challenger Denny Rehberg. Intrade had called the race a 68 percent favorite for Rehberg, a U.S. House member.
The potential miss in Florida, where Intrade gave Romney a 70 percent chance of winning, shows “limits” in using market-based predictions for elections rather than statistics-based indicators, Zelizer said yesterday in an interview.
In 2008, placing a winning wager on the election outcome was easier, he said.
“The combination of the financial collapse and Bush’s unpopularity made it more obvious that McCain was going to lose,” Zelizer said. “In the more competitive battleground situation it’s probably easier to make a mistake.”
With the count in Florida still to be finished, Obama was leading Romney nationwide in the popular vote and won a decisive Electoral College victory.
Intrade’s Internet betting pool rivals, Betfair and IEM, were even more optimistic about the president’s prospects, putting the likelihood of his re-election at 77 percent and 75 percent respectively at about 5 p.m. the day before the election.
Paddy Power Plc, Ireland’s largest bookmaker, didn’t wait for all the votes to be counted to declare a winner saying it would pay out for an Obama victory. The Dublin-based company said it was paying out more than 500,000 euros ($640,000) on Obama bets.
“Paddy Power believes it’s a done deal and Obama is a nailed-on certainty to win a second term,” the company said in a statement on its website.
With the exception of Florida, the electoral map shown by wagering at Dublin-based Intrade hewed closely to the results from aggregated polling data at Pollster.com.
In 2008, Intrade bettors said Obama would win 364 electoral votes, one fewer than he actually received in his campaign against Republican challenger John McCain. Silver’s poll analysis correctly predicted outcomes in 49 of the 50 states, missing Obama’s win of Indiana that year.
Intrade first offered a presidential wagering market for the George W. Bush-John Kerry contest in 2004. Its subscribers correctly predicted the winner of all 50 states.
Intrade allows users to place bets on hundreds of political and other events which are presented as yes-or-no questions.
Share price is determined by cumulative betting. Winners receive $10 per share while losers receive zero. The site charges members a monthly fee of $4.99 per account to enter the betting pool.