With less than 72 hours remaining in what it feels like the longest election race ever, President Obama and Mitt Romney are digging deep to put in their final campaign kick.
Both campaigns have flooded the airwaves with ads and are stumping all across the country in a last ditch effort to convince those few crucial “undecideds” that they deserve to be at the helm of the most powerful nation on Earth. Latest polls suggest both candidates are locked in a dead heat. A brief glimpse at pundit headlines also suggests the final outcome is a bit of a coin toss.
Yet over at Intrade, traders appear to have a stronger opinion on the outcome of the election. As of Sunday morning, the political betting market forecasts President Obama had a 65% chance of winning the election. While various polls have shown Obama leading Romney, the lead is often razor-thin and well within the margin of error. Thus, it is not merely the prediction of Obama winning that is startling but rather the degree to which traders appear to believe Obama will secure the win. Similarly, other betting sites forecast Obama’s odds of winning to be quite superb.
Intrade is a prediction market, but given the striking difference of opinion on Obama’s chances, one has to wonder is there some information that these “traders” have been able to tap into that pollsters were unable to capture? The thought behind these types of prediction markets is that the wisdom of the group can more accurately predict the outcome of certain events than one-off polls, which often tend to be biased in one direction anyway. And although some might argue these traders aren’t as sophisticated as the ones operating on Wall Street, Intrade has a pretty good track record as far as presidential elections go. Its market accurately predicted the outcome of the previous two presidential elections, which includes accurately predicting the outcome of all 50 states in the 2004 election.
While this may be comforting news for Team Obama, a sample size of two is hardly definitive proof that this market is a better indicator of the elections outcome than the pundits’ tried and true polls. Additionally, some scholars at the University of Colorado, forecast Romney to win by a landslide based on a statistical model that analyzes myriad factors on a state-by-state basis. The model accurately classified the winners of the past eight presidential elections, including the two years with strong independent candidates. More interestingly, it also correctly estimated the 2000 election outcome, when Al Gore won the popular vote but George W. Bush won the election through the Electoral College.
In reality, no one has a clue who will emerge victorious after all the ballots are counted, but that is what makes it all so exciting, or if you’re a half glass empty kind of person, so unnerving.