Prediction Markets Now See Obama Win

February 14, 2008 by  


WASHINGTON (Reuters) – Traders wagering on the outcome of the U.S. presidential vote were overwhelmingly betting on Monday that Illinois Sen. Barack Obama will defeat former first lady Hillary Clinton for the Democratic nomination and ultimately win the presidency.

Obama, whose campaign swept four state Democratic presidential contests against Clinton over the weekend, was trading at about 70 on Monday on the Dublin, Ireland-based Intrade predictions market, meaning traders gave him a 70 percent chance of being the Democrats’ presidential candidate in the November election.

Clinton, who replaced her campaign manager in a staff shake-up, was selling at about 30, meaning traders gave her a 30 percent chance of winning the Democratic nomination, data on the Intrade web site showed.

Traders on the Iowa Electronic Markets, a nonprofit exchange run by researchers at the University of Iowa, had similar expectations, giving Obama a 70 percent chance of winning the nomination and Clinton about a 27 percent chance.

Researchers who study political forecasting markets say their predictive power is comparable to opinion polls. Contracts are generally structured so prices can be read as the percentage likelihood of a candidate winning the race.

Arizona Sen. John McCain was the overwhelming favorite to win the Republican presidential nomination, with Intrade traders giving him nearly a 95 percent chance of winning.

His rival Mike Huckabee, the former Arkansas governor, was given only about a 2.5 percent chance of winning, despite winning two of three state contests over the weekend. The two Republican candidates were given similar chances by traders on the Iowa exchange.

Intrade traders gave Obama a 46 percent chance of winning the presidency, versus 33 percent for McCain and 20 percent for Clinton.

As recently as January 1 traders were giving Clinton about a 70 percent chance of winning the Democratic nomination. But expectations about Clinton’s candidacy tumbled after the first of the year, dropping below 30 percent after she lost the Iowa presidential contest to Obama.

Her New Hampshire victory surprised the forecasting markets and she recovered to trade between 55 and 70 until the days after February 5, when nearly half the U.S. states chose presidential candidates. Since then expectations have been falling and Clinton has lost several state contests to Obama.

(Editing by David Wiessler)

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