Throughout the run-up to the Iowa caucuses, I’ve been keeping a close eye on the trading action at TradeSports, an Ireland-based Internet betting site. (A note of caution: Wagering at such sites, as best I can determine, is of uncertain legality for U.S. citizens.)
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These betting markets have been shown in various studies to be more accurate than polling or expert predictions in forecasting elections, commodity futures, and economic growth. Some academics even have suggested the markets should play a role in determining public policy, such as with the ill-fated terror futures market from last summer. At any rate, the TradeSports site had been showing a steady drop in support for Howard Dean, from a high of around 75 percent in late 2003 (meaning that bettors thought he had a 75 percent chance of winning) to around 40 percent or so in recent days, putting him in a dead heat with John Kerry. But just before the Iowans started caucusing, Kerry lost almost quarter of his support. I saw a similar phenomenon during the California governor’s race when support on Election Day for Arnold Schwarzenegger suddenly soared in the afternoon even before preliminary exit polls were released. And, as we now know, Schwarzenegger cruised to an easy victory.
This time, however, the bettors got it wrong. In fact, support for Dean in the Hawkeye State was imploding. Someone somewhere apparently thought they knew something. Apparently they really didn’t . . .I will be checking in with the betting markets throughout the election season to see how they fare. Right now, it looks like a dead heat between Kerry and Dean in New Hampshire, which has its primary next week.
