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Intrade Was Right: No Contest for Obama

Written by Gary North on November 7, 2012

Polls: “All that money. So little usefulness.”

Intrade betting for months has conveyed the same story: Obama would win, the Democrats would take the Senate, and the Republicans would take the House.

The Republicans had a chance in the Senate, but they blew it, big time. The reversal came with Todd Akin’s bonehead statement about rape and pregnancy. The dominoes started falling. Intrade said the Republicans had a 20% chance to take the Senate on the day of the election.


The House was equally secure for the Republicans.

There was the article on eight conservatives pundits who predicted a Romney victory. They look silly now. Peggy Noonan said Romney would win, based on “vibrations.” She writes great speeches. As a political forecaster, she is silly.

The polls are silly.

The polls are economically useless when competing against Intrade and other betting sites.

Intrade knew. The polls didn’t.

Once again, the law of large numbers works. The wisdom of crowds works. We have known this for over a century. It goes back to Darwin’s cousin, Francis Galton. Wikipedia describes his discovery.

Galton was a keen observer. In 1906, visiting a livestock fair, he stumbled upon an intriguing contest. An ox was on display, and the villagers were invited to guess the animal’s weight after it was slaughtered and dressed. Nearly 800 participated, but not one person hit the exact mark: 1,198 pounds. Galton stated that “the middlemost estimate expresses the vox populi, every other estimate being condemned as too low or too high by a majority of the voters”[24], and calculated this value (in modern terminology, the median) as 1,207 pounds. To his surprise, this was within 0.8% of the weight measured by the judges. Soon afterwards, he acknowledged that the mean of the guesses, at 1,197 pounds, was even more accurate.

But we don’t believe him. We keep thinking that scientific polls are scientific, i.e., better at determining the outcome of a contest that betting is. That is bad science.

Drudge kept running poll results in headlines.

The popular vote was close. It was inside the margin of error. That is another way of saying: “Stop polling. The margin of error on Intrade is much smaller.”

Polls are expensive. Intrade costs us nothing, as long as we do not bet. We ride on the findings of really silly people, i.e., people who bet money on outcomes for the sake of a game. They do not have to play the game, but they do. They put their hard-earned money on the line, when there is no need to.

But bettors serve a useful purpose. They let us forecast outcomes more accurately, especially head-to-head outcomes. The more bettors there are, the more likely they will forecast the outcome correctly. When the betting is tied to a non-game event, the information it generates is useful — far more useful than an expensive scientific poll.

As you can see, I never doubted Intrade’s results after the Senate fell from 53-47 for the Republicans to 20-80 against. There was no “margin of error” worth talking about in any of the three betting markets: President, Senate, or House.

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16 thoughts on “Intrade Was Right: No Contest for Obama

  1. Missouri Voter says:

    Akin's poorly-worded statement (and following apology) wouldn't have been a significant factor if the Republican establishment had not thrown him under the bus.

  2. You can't win a race when its fixed, voter fraud and the money to buy this election was in OBAMA'S corner. Big money from the unions and supporters. Now we can look forward for the new kingdom of OBAMA and when he declares himself as king all you supporters blow down and kiss his ass. FREEDOM WILL BE GONE OUR GREAT GRAND KIDS WILL PAY FOR US BEING DOME

  3. You're absolutely correct – this was a referendum on the electorate – we are going the way of Rome – giving the right to vote to the clueless and leeches of society will cause its downfall. It does in every society. I thought we had more time, but I was wrong. We are witnessing the end of the USA – I just wonder how painful it will become.

  4. If the GOP establishment hadn't hated Ron Paul so much and made him the nominee, it would have been 1980 all over again. There's no way Obama could have overcome Paul's popular support and experience. Bush won his second term and Obama his first by stealing Paul's genuine message of hope and change. To Bush & Obama they were just buzzwords to sucker in the rubes.
    Instead the GOP went with "Mitch-A-Sketch" and doofuses like Aiken. At every level of the campaign, from the mass meetings up to the district convention (from then on the Romney-ites had a lock on the nomination and rules process), Mitch's minions were the most arrogant, smug, condescending yuppies I've ever encountered. They got what they deserved.

  5. Today I watched my country die.
    When a puppet man not vetted, who can spend more money than he possesses, can lie to people for four years with the aid of a once great press send us on to the path to ruin.
    Today I watched my country die.
    For four years this country has been in a frenzy of tearing down.
    Of tearing down religious values.
    Of tearing down of the expatiation of a country of law.
    Of lauding lack of morals as equality.
    Today I watched my country die.
    Being a student of history I weep for the millions that will die over the coming years while this petty dictator finishes off what he has started.
    I weep for my child and her children and all the other children who will
    die wondering where the next meal is going to come from.
    Today I watched my country die.
    The end will not be swift but it will be painful, and I am old and can do nothing but pray to the God we have abandoned for mercy on us.
    The Rest of my days that will be my lot.
    Today I watched my country die.
    RIP America

  6. What will all those takers do when obamy pulls the plug and stops all the gifts to the non-workers? He needs not buy their
    votes anymore. It just shows that it is nice to have the corrupt backing you.

  7. "The reversal came with Todd Akins bonehead statement about rape and pregnancy."

    That's NOT when it started falling apart. That happened when the REPUBLICAN PARTY ABANDONED AKIN, refusing to stand behind him, arrogantly declaring that what he said was just unforgivable (in act if not in words)! THIS is what's wrong with the Republicans, they think they walk on WATER, that THEIR precious opinions are EVERYTHING! So he said something silly, without really thinking it through. So WHAT?? He corrected himself. Was it REALLY worth giving the seat BACK to McCaskill? Oh 'NO'!! said the party…. let's just shoot ourselves in the HEAD instead of standing by a fellow Senator. REPUBLICAN PARTY = PARTY OF TOTAL STUPIDITY as far as I'm concerned (the exact reason I dropped out of that party in 2010).

  8. Let's not forget how the arrogant TEA PARTY leadership gave us the first lesbian baby killer in the Senate for Wisconsin. Tea Party arrogance said let's back our boy in a distance 3rd and take votes away from Hovde. What do we get, the old idiot Tommy Thompson who gets walloped by the most liberal bag in the state. Thanks to the Tea Party.

  9. It is too bad that so many sold their most important asset for a little money, their right to vote. Just like Esau who sold hi birthright for a pot of pottage.

  10. nobodysfool says:

    Dean, it definitely was like a death. Not "morning in America" as Reagan talked about, but "mourning in America". It is hard to win against a cadre of cartoon characters, Illegal aliens, and dead people — not to even mention the brain dead. I know college kids who think they are thinking for themselves who are just elated this morning, believing they have voted for The One. Won't they be surprised one day when they wind up in one of oBlamer's gulags. I absolutely hate that my grandchildren and great grands will have to pay the price. On Black Tuesday, November 6, 2012, we voted as a country to throw away our sovereignty, our right to life and liberty, our right of free speech, our right to own guns, and we gave those rights to the UN, Russia, Iran, all muslim countries, and to a two-bit puppet homosexual dictator from Kenya. America is toast.

  11. now we have become a big government entitlement nation and the end of America as we know it

  12. You state so well the emotion I encounter when pondering the ramifications of this election.

  13. As a retired career futures trader, I, too, was concerned at the Intrade betting favored O'Bama. People who use markets understand that the buying/selling of contracts is the efficient way to price traded media at any particular moment. It is volatile, but that's as it should be when constant new information is intruding into the give and take.

    It's interesting that this government seeks to provide unilaterally, unfiltered by reality, with its unintended consequences, for a multitude of prices.This government claims it knows better than any market just what things should cost, just like the Soviet planners did. We all know how that turned out, eh?

    Perhaps the central planning types might learn from the abject failures of this approach. Examples abound. 🙂

  14. 'Sconsin Patriot says:

    Ditto Dean & Nobody'sfool……..Talked with a friend this a.m.and she said it's like mourning a death.

  15. It will be extremely painful for those of us who loved our country.

  16. Root Digger says:

    When afraid you have two choices. Flee or fight…… I have just begun to fight. How 'bout you. If you are a Christian – get your armor on..(Ephesians 6). If you're a liberty lover – If you are a patriot – Pledge it ALL.: Life, Fortune, Reputation. If you are a parent and love your child, PLEASE get "DUMBING US DOWN The Hidden Curriculum of Compulsory Schooling", by John Taylor Gatto. Go to his website… The TRUTH will set us free – IF we care enough to believe it and pass it on!! For those of you who want to flee – where you gonna go?? the United Nations owns it ALL.. Let's Dig the ROOT!