When Markets Collide

Matt Drudge flashes the odds on Hillary (and others ) becoming the next President of the United States:

Odds that Sen. Hillary Rodham Clinton (D-N.Y.) will win the White House in 2008 have improved greatly -- at least in the underworld of online betting, ROLL CALL reports.

At the Web-based sports book, SportsInteraction.com, Clinton's odds of occupying the White House in 2008 have improved to 5-1. Former New York Mayor Rudy Giuliani follows with 7-1 odds of winning the presidency in 2008, ahead of former Sen. John Edwards (D-N.C.), who fetched 9-1 odds.

New Mexico Gov. Bill Richardson is fourth with 13-1 odds, followed by Sen. John McCain (R-Ariz.) with 15-1 odds. Sen. John Kerry (D-Mass.) is last on the SportsInteraction.com Web site, with 41-1 odds of winning the White House in 2008.

Here is SportsInteraction.com, the website Roll Call noted.  Set against that is my personal fave, TradeSports, which breaks the betting down a bit: Hillary has a 48% chance of becoming the Democratic nominee, and the Democrats have a 51% chance of winning the White House - ergo, she has 25% chance of becoming the next President.  My humble calculator translates that to 3-1 odds.

Some of the other candidates also provoke wide disagreement - Gov. Richardson has a 3.4% chance of winning the Dem nomination - figure a 1.7% chance that he will be hearing "Hail to the Chief" on a regular basis, and that translates to roughly 50-1 - if the other site has him fourth at 13-1, they are smoking something (and we have a Bill Richardson story to back that up!).

Tradesports makes Biden the number two Dem with a 10% chance of becoming the nominee; Edwards is at 6.5% (which is about 30-1 for him to win the Presidency).

On the Republican side, Allen at 19% and McCain at 18% lead the pack [Allen leading?  How about that?]; Frist is third at 13%, Giuliani is fourth at 10%, and Rice is fifth at 5% (all odds are for winning the Rep nomination).

What does it mean?  Decision '08 is on this 24/7.

Comments

[Mark Coffey]

Or, in the words of another blogger whose work I greatly admire, would you believe 2/5?...Thanks for the link (interesting how close my odds are to those of SportsInteraction...until you consider my odds are to win the nomination, not the White House)....

[Mark Coffey]

Another thought: I don't see Richardson or Biden with any kind of realistic chance (Biden second? Come on...), if for no other reason (and there ARE other reasons) than the native son aspect - the Dems are going to want a nominee (and Hillary suits this purpose just fine) who delivers more 'sure' electoral votes than Delaware's three or New Mexico's five...

[byrd]

It seems strange that they would give the democrats a 51% chance of winning the white house without knowing who either party's nominee is.

I would think any serious better would be unwilling to lay odds with so much vital information missing. But then I'm not a gambler.

[Creech]

It means that Dick Cheney needs to resign for "health
reasons" and the Republicans appoint a new VP who can
spend three years impressing the American public and run for President as a kind of incumbent. I know VPs don't always win (see Nixon 1960) but they have a better shot than a relative unknown going up against Hillary.

[Jor]

The accuracy of this stuff has to be some function of market cap. I'm not sure how many people gotta be involved, or how many shares, before you get around reality.

[w]

lol...have a better chance of predicting the average temperature over the continental US on election day than the next president this far out

[Crank]

I'd put the odds on Hillary winning at 8-to-3, assuming a 75% chance of winning the nomination and a 50/50 chance of winning the general.

I just don't see how you can give her any significant odds of losing the primaries. There aren't enough moderates in the party to support a Bredesen-like Southern governor. And as we saw in Iowa & NH in 2004, there aren't enough hard anti-war lefties to defeat her over her foreign policy moderation. The early Democratic primaries are dominated by mainstream liberal schoolteachers, who love her. And woe betide any male candidate who criticizes her. Rick Lazio got attacked for being a bully for walking over to her side of the stage during a debate, despite the fact that he looked like a brown-nosing kid handing an apple to the teacher.

[gt]

byrd,

I would suppose it's based on historical trends. Since WW2 the two parties have controlled the WH for 8 years and then changed, like clockwork. The only exception was Carter. So there is a good chance of a change in party in 2008.

[Lurking Observer]

gt:

And Bush-I. (Reagan-1980-1988; Bush I-1988-1992).

[gt]

What I meant is that the 16 year period (1976-1992) instead of being 8-8 was 12-4. Other than that the two parties have switched sides every 8 years since WW2.

[SaveFarris]

I think 2004 had less to do with "hard anti-war lefties" and more to do with Dems falling for the old "electability" quality. I'm sure TeamElephant has quite the offensive lined up against Hill! If early Dem voters start to get a whiff of it, they may opt out for a "safer" choice like Bayh or Richardson.

But again, we're 3 calender years and 2 Michael Moore films away from Nov. 2008, so what do we know?!?

[Moe Lane]

"I just don't see how you can give her any significant odds of losing the primaries."

Frankly, neither can I. The Democrats have a startlingly light bench for '08: their best governor (Granholm) is ineligble - which, from what I've heard, is a shame - and '04 used up a lot of the usual Senate/House prospects. Of the remainder with good national reps, Sen Obama's prospects will be interesting to contemplate in '16 ('12 if the Democrats lose in '08), but forced-growth won't work. Sen. Clinton has the advantages of Famous Name, High Status and Brief Official Legislative History; and those who think that her activities during her husband's terms will sink her are forgetting that Democrats can go through transformative events, too. A strong enough jump out of the gate and she can avoid the appease-the-base pitfalls that bedevil primary contenders.

I don't expect that I'll vote for her, but she knows what she's doing when it comes to politics - and the GOP bench is looking kind of light for '08, too.

[Jim Glass]

"At the Web-based sports book, SportsInteraction.com, Clinton's odds of occupying the White House in 2008 have improved to 5-1 ... at TradeSports, Hillary has ... 25% chance of becoming the next President. My humble calculator translates that to 3-1 odds. "

Arbitrage! Arbitrage! Let's all get rich! Easy money...

[byrd]

gt:

That makes some sense. After 8 years, people are usually ready for a change. Once you decide that will be a factor, then it's just a quesiton of how much money will you put down based on that factor.

[Fredrik Nyman]

After the mediocre choices we had in '04, isn't it depressing to realize that our choices in '08 will likely be considerably worse?

[sammler]

I have to point out that you can't simply multiply the probability of Hillary's being nominated by the probability of a Democrat's winning to get the odds on Hillary. The two events might not be independent.

During the 2004 primaries, for example, it was widely felt that a Dean nomination would lead to a smaller chance of Democratic victory; thus the chance of a Dean presidency was considered smaller than the multiplication of probabilities would suggest. "Electability", anyone?

In Hillary's case, I don't know which way this effect points. You could tease some information out of the two time series, but it wouldn't be a good market-based indicator unless there is reason to believe it is influencing people's trading decisions.

[dsquared]

Tom, Tom, Tom!

ergo, she has 25% chance of becoming the next President

Ergo, assuming that "Hillary wins the Dem nomination" and "Dems win the Presidency" are independent events. Which is a point which could perhaps be argued for rather than assumed.

Jim: The arbitrage isn't there (or at least isn't there in those contracts) for the same reason. If you followed Tom's strategy you would sell Hillary in the Tradesports nomination market, sell Democrats in the Tradesports Presidential market and back her on Sportsinteraction. You could get caught quite badly if she won the nomination but lost the election (which I'm assuming has more than a negligible chance of happening).