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Aside: Political Betting

We spoke before about the Jug Future pool and how interesting future bets are, and how they have changed the betting landcscape. This is no more prevalent than in the betting in various forms of the US and Canadian elections that are scheduled within the next month or so. (Aside: this is a gambling post and no politics here are allowed, there are plenty of blogs that talk politics).

First off, you have to make sure that in your jurisdiction this betting is allowed. This post is not an encouragement to bet.

I have watched election betting on the web since about the year 2000. That year of course was the contested election. Volumes were large, and it was a precursor about what was to come. Election betting has captured the imagination of millions. Here are a few basic rules, if one wishes to watch and participate this year.

First, tight elections are the ones that generate the most volume. So far this election fits the bill. In 2004 we had a unique election where people (the mainstream) did not overly like either candidate. It could not break one way or the other because of that. This time, the exact opposite is happening with the same result. The favorability of both candidates is high and when we think about it, why would they not be? You have a guy who did not grow up in privilege who has a shot, a guy who is disliked by old-school politicians for wanting to change things too much, and then we add a woman who when asked about the price of milk at Walmart can actually answer the question because she shopped there last week. The middle do not dislike either of these sides this year and that makes for good betting.

Second, never pay attention to the blogs. These blogs are written (for the most part) by hard-core haters of one side or the other. They love hearing themselves speak, and they might think they are doing some good, but in the big picture they are inconsequential. They are preaching to the choir. What to watch for are two big factors: The independent vote and the favorability ratings. The middle sways elections, not the hard-core.

There was considerable evidence of this earlier this month, which sharp traders used to make some moola. The mushy middle moved about September 1st in favour of John McCain. The media chalked this up to a bounce, but traders knew otherwise. Slowly but surely, McCain went from dog to chalk. $1000 invested on McCain at Intrade.com made a sharp trader $140 in a week. I would suspect McCain is overbought right now and I think he will go back to underdog status in the coming days. But we'll see.

Third, traders are more right than the pollsters, more often than not. When people are putting up their hard earned cash to bet, it is not for a sympathy vote. This is evidenced by several of the markets, like Intrade and in Canada the University of British Columbia market.

Fourth, knee-jerk reactions do not make for quick trades. In a market like an in-running football game, the odds change tremendously if a team blocks a kick, or scores a touchdown. In political betting there is a lag. Will today's news stick? Traders tend to wait for direction and opinion.

Fifth, the pollsters who are good are many, but Rasmussen in my opinion is the one worth watching. He is top-notch and has been for many years.

Sixth, Intrade seems to lead Betfair. US/Euro differences? I don't know. But it seems so.

In Canada, the race is nowhere near as exciting. The UBC market is one to watch, that Canadians can play in. I think it will take some sort of shock to make this market really fly as the conservatives look like they are a lock. On election night there may be some opps here though. Maybe we will blog that night.

Anyhow, there is a primer about election betting that maybe some gamblers would find interesting. We'll be back to speak about the Jug later.

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