Which candidates do you think will win the biggest races in the 2010 elections? Willing to put your money where your mouth is? Intrade.com provides a market exchange that lets users do just that. And the results are surprisingly accurate, historically.
Much like investors put their money on companies they feel will do well in the stock market, traders on Intrade prediction markets can bet on the likelihood of certain events happening, including elections.
How does it work? Well, take the current midterm elections as an example. Back in 2009, you could spend 20 cents to win a dollar betting the Republican Party would take control of the House of Representatives. As of Tuesday afternoon, that bet is now 96 cents.
Makes sense from a financial perspective, but how does that equate to actually predicting a political outcome?
Intrade explains, "Since our contracts trade between 0 and 100, you can think of the price at any time to be the percentage probability of that event occurring." So, for example, since bidding for the GOP controlling the House is at 96 cents, this means traders give the party a 96% chance of this happening.
One might question how accurate these betting predictions could possibly be, but historically, Intrade has been pretty much spot on with presidential elections.
Take the 2004 election between George W. Bush and John Kerry. Intrade was able to predict every state’s support. In the 2008 presidential election, the market correctly predicted every state but one.
One study suggests Intrade’s market is even more accurate than the biggest polling companies. The Wharton School of Business found that the market had half the margin of error of comparable Gallup polls in predicting elections http://www.intrade.com/news/news_256.html.
So what’s the market predicting for 2010? Well, as mentioned before, Intrade users are giving the Republicans a 96% chance at taking control of the House. For the Senate, the picture is a tossup, with a chance of 49.9% the party will take control.
Intrade also breaks down individual races. For the Senate race in Nevada, for example, Intrade predicts a 72.5% chance Republican candidate Sharron Angle will beat out Senate Majority Leader Harry Reid. According to FOX News' own polling data from October 30, Angle is predicted to win 48% of the vote, compared to Reid's 45%. With a margin of error of three point's, this is still a bit of a tossup.
Curious how well Intrade users think Tea Party favorite Christine O'Donnell will do in Delaware's Senate race? They give her a 9.8% chance. A FOX News Poll from last month found that 38% of likely voters would vote for her, compared to 54% for the Democratic Candidate Chris Coons.
Here are some other big races:
- Washington Senate Race: 69.9% chance Democratic incumbent Patty Murray will beat Republican challenger Dino Rossi
- Colorado Governor Race: 88% chance Democratic candidate John Hickenlooper will beat American Constitutional Party nominee Tom Tancredo
- Ohio Governor Race: 75% chance Republican candidate John Kasich will beat Democratic incumbent Ted Strickland
Interestingly, because of its betting nature, Intrade isn’t allowed in the U.S. and is instead based in Ireland. Last spring, FOX Business Network’s John Stossel explored how accurate betting on Intrade can be in predicting future events. You can watch the video clip here.