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They Call The Election A Horse Race; It Has Real Bettors, Too

The Dublin-based prediction market site Intrade lets users bet money on whom they expect to win a variety of U.S. political races, including the presidential race.
NPR/Intrade screen grab
The Dublin-based prediction market site Intrade lets users bet money on whom they expect to win a variety of U.S. political races, including the presidential race.

By this point in the campaign season, the presidential polls may have your head spinning. Romney's up 7 points in one, Obama's up 3 in another ... and on any given day, a dozen other polls are swirling, each offering a different take.

But there is a market out there that distills all those data down to one simple predictive number — and gives you a chance to bet on it. Sure, there's likely a bookie in your city who could give you odds on the presidential race and happily take your bet. But for most of the nation's history, would-be political bettors had another option: betting markets.

Before Polling, Gauging The Political Winds

Koleman Strumpf, an economics professor at the University of Kansas, says these markets have been around since the beginning of our democracy and were especially popular in the late 19th and early 20th centuries.

"There was a period in the early part of the 20th century when this market literally existed right outside Wall Street," Strumpf says. It was outdoors, right on the curb, so it became known as the "curb market." "People would actively bet on all sorts of elections," he says. "And for sure, in the period right about now in October, there [were] huge amounts of betting activity."

Political betting was also an important tool for newspapers before the era of public opinion polling. Outlets would report on the action to get a sense of which candidate was winning.

A journalist reporting on the market "would list not only what the prices were, to give you an idea who was leading," Strumpf says, but "would also list who was making these investments or bets."

That meant that readers would know if the bets were being placed by specific traders — or by politicos from the New York Democratic political machine Tammany Hall, Strumpf says.

Off The Curb ... And Online

The markets were very accurate predictors, but they faded from the front pages once election polling came into its own. But in recent years, they've re-emerged in a couple of forms. One is the Iowa Electronic Market, an online small-stakes exchange run by the University of Iowa's College of Business, where you can buy a share of Obama or Romney to win.

"It works kind of a lot like a stock market, except for instead of trading shares of IBM or Johnson & Johnson, you're buying shares of candidates," says Strumpf. "If you own a share of Mitt Romney and he gets elected, you get a dollar in this market. If he doesn't win, your share expires worthless."

On Friday, a bettor could buy a share of Mitt Romney for just under 40 cents, which indicates the traders think Romney has a 40 percent chance of winning the election. Meanwhile, President Obama's odds of winning are a little over 60 percent — at a share cost of about 60 cents.

It's technically illegal to bet on a presidential campaign in the United States. However, the Commodity Futures Trading Commission, which regulates commodity futures and options markets, has declined to rule on whether the Iowa market is legal.

Intrade, based in Ireland, is a larger and better-known online prediction market.

"We've got a good record when it comes to elections," says Carl Wolfenden, Intrade's operations manager. "Back in 2004, the markets correctly predicted a George W. Bush victory, as well as picking the winner of all 50 states."

Distilling A Morass Of Variables

Thus far, Wolfenden says, almost 8.5 million shares, worth almost $85 million, have been traded on the 2012 presidential election. Americans betting in the Intrade market are in a legal gray area, but the site does have some American traders — although it's unclear how many. Currently, Intrade's odds are about the same as the Iowa market's: a 60 percent likelihood of an Obama victory.

Strumpf says those odds are especially helpful for the average person or the water-cooler pundit, because they reflect all the election variables, distilled into a single predictive number.

That essentially means the investors "are just basically looking at these polls, and lots of other information and processing it basically for you," Strumpf says.

So even with a recent Gallup poll indicating Romney is up by 7 points, the people putting down real money are reminding us that it's a bit more complicated, with swing states and the Electoral College all figuring in. And, at least for the moment, those investors are saying they still expect Obama to win.

Copyright 2021 NPR. To see more, visit

John Ydstie has covered the economy, Wall Street, and the Federal Reserve at NPR for nearly three decades. Over the years, NPR has also employed Ydstie's reporting skills to cover major stories like the aftermath of Sept. 11, Hurricane Katrina, the Jack Abramoff lobbying scandal, and the implementation of the Affordable Care Act. He was a lead reporter in NPR's coverage of the global financial crisis and the Great Recession, as well as the network's coverage of President Trump's economic policies. Ydstie has also been a guest host on the NPR news programs Morning Edition, All Things Considered, and Weekend Edition. Ydstie stepped back from full-time reporting in late 2018, but plans to continue to contribute to NPR through part-time assignments and work on special projects.