Betting on the election
What would have happened if you had bought an Intrade contract on the
favorite in each of the battleground states on the morning of the
election? On the underdog? On Obama across the board? On McCain?
Here's the data I'm using. The Intrade numbers were extracted from
their website sometime in the early morning (Pacific Time) on
November 4th.
STATE OC MC RESULT
NH 94 09 9.6
PA 90 08 10.0
WV 07 88 -13
VA 88 12 6.3
NC 61 40 0.3
GA 30 70 -5.2
FL 79 25 2.8
OH 84 20 4.5
MI 95 05 16
IN 38 68 1.0
WI 94 05 14
MN 95 09 10
MO 56 50 0.1
ND 22 80 -8.6
CO 91 08 9.0
NM 93 10 15
MT 26 70 2.3
AZ 19 86 8.5
NV 91 13 12
So with NH, if you were using either the 'favorite' or the 'straight
Obama' strategy, you could have bought an Obama contract for 94, you
would have gotten paid off with 100 (because Obama won NH), and grossed
6 (100 - 94).
I'm having a hard time figuring out the fee/vig structure on Intrade.
From what I've read, it seems obscenely high: 3-5 units to take a
position, 10 units once your contract is to be paid off, and none if
your contract loses. Is that right? So to take a 50-50 position you
pay 5+10 = 15 if you win, and 5 if you lose, for an average vig of 10
units or 20% (since the contract costs you 50 units) ????
And then they talk in another section about commissions as well as
fees? Just call me confused.
For the moment I'm going to assume a simpler structure structure: no
cost to purchase a contract, N units of vig when you win, and none
when you lose. So if N = 5, then as above (betting on Obama to win NH)
you net a 1 unit profit (100 - 94) - 5.
The results:
A bet on the favorite:
Vig 0: Profit 7.05/contract
Vig 5: Profit 2.33/contract
Vig 10: Profit -2.39/contract
A bet on the underdog:
Vig 0: Profit: -8.67/contract
Vig 5: Profit: -9.22/contract
Vig 10: Profit: -9.78/contract
A bet on Obama:
Vig 0: Profit: 2.61/contract
Vig 5: Profit: -1.00/contract
Vig 10: Profit: -4.61/contract
A bet on McCain:
Vig 0: Profit: -4.22/contract
Vig 5: Profit: -5.89/contract
Vig 10: Profit: -7.56/contract
So in general the favorite had far too low a contract price, while
Obama had a slightly underpriced contract, and vice versa for the
underdog and McCain.
favorite in each of the battleground states on the morning of the
election? On the underdog? On Obama across the board? On McCain?
Here's the data I'm using. The Intrade numbers were extracted from
their website sometime in the early morning (Pacific Time) on
November 4th.
STATE OC MC RESULT
NH 94 09 9.6
PA 90 08 10.0
WV 07 88 -13
VA 88 12 6.3
NC 61 40 0.3
GA 30 70 -5.2
FL 79 25 2.8
OH 84 20 4.5
MI 95 05 16
IN 38 68 1.0
WI 94 05 14
MN 95 09 10
MO 56 50 0.1
ND 22 80 -8.6
CO 91 08 9.0
NM 93 10 15
MT 26 70 2.3
AZ 19 86 8.5
NV 91 13 12
So with NH, if you were using either the 'favorite' or the 'straight
Obama' strategy, you could have bought an Obama contract for 94, you
would have gotten paid off with 100 (because Obama won NH), and grossed
6 (100 - 94).
I'm having a hard time figuring out the fee/vig structure on Intrade.
From what I've read, it seems obscenely high: 3-5 units to take a
position, 10 units once your contract is to be paid off, and none if
your contract loses. Is that right? So to take a 50-50 position you
pay 5+10 = 15 if you win, and 5 if you lose, for an average vig of 10
units or 20% (since the contract costs you 50 units) ????
And then they talk in another section about commissions as well as
fees? Just call me confused.
For the moment I'm going to assume a simpler structure structure: no
cost to purchase a contract, N units of vig when you win, and none
when you lose. So if N = 5, then as above (betting on Obama to win NH)
you net a 1 unit profit (100 - 94) - 5.
The results:
A bet on the favorite:
Vig 0: Profit 7.05/contract
Vig 5: Profit 2.33/contract
Vig 10: Profit -2.39/contract
A bet on the underdog:
Vig 0: Profit: -8.67/contract
Vig 5: Profit: -9.22/contract
Vig 10: Profit: -9.78/contract
A bet on Obama:
Vig 0: Profit: 2.61/contract
Vig 5: Profit: -1.00/contract
Vig 10: Profit: -4.61/contract
A bet on McCain:
Vig 0: Profit: -4.22/contract
Vig 5: Profit: -5.89/contract
Vig 10: Profit: -7.56/contract
So in general the favorite had far too low a contract price, while
Obama had a slightly underpriced contract, and vice versa for the
underdog and McCain.