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Trader Lost Millions Betting on Romney
September 24, 2013 3:12 AM   Subscribe

A new academic paper digging into presidential betting in the final weeks of the 2012 election finds that a single trader lost between $4 million and $7 million placing a flurry of Intrade bets on Mitt Romney—perhaps to make the Republican nominee’s chance of victory appear brighter.
Two economists who studied the data offer various rationales for the trader’s aggressive wagering on Mr. Romney in the final two weeks of the campaign. The anonymous trader placed 1.2 million pro-Romney contracts, some of which were actually in the form of bets against a Barack Obama victory.

The most plausible reason for the betting, the authors conclude, is that “this trader could have been attempting to manipulate beliefs about the odds of victory in an attempt to boost fundraising, campaign morale, and turnout.”
via the WSJ via PoliticalWire

Weird behavior on the Romney-Obama betting market previously.
posted by Elementary Penguin (104 comments total) 12 users marked this as a favorite

 
Another interesting result from the paper, more about how unlike other markets the presidential election market was (on page 4):
[O]ne of our most striking ndings is that 86% of traders, accounting for 52% of volume, never change the direction of their exposure even once. A further 25% of volume comes from 8% of traders who are strongly biased in one direction or the other. A handful of arbitrageurs account for another 14% of volume, leaving just 6% of accounts and 8% of volume associated with individuals who are unbiased in the sense that they are willing to take directional positions oneither side of the market.
posted by Elementary Penguin at 3:16 AM on September 24, 2013 [4 favorites]


That poor trader! If only he'd waited a few years, he could have backed the Atlas Shrugged kickstarter instead.
posted by The River Ivel at 3:32 AM on September 24, 2013 [12 favorites]


:)
posted by Potomac Avenue at 3:42 AM on September 24, 2013 [3 favorites]


In comparison to the almost $900m spent on television ads by both parities during the same election cycle, it doesn't seem plausible that $7m spent placing bets on Mitt represents any real serious attempt "to manipulate beliefs about the odds of victory in an attempt to boost fundraising, campaign morale, and turnout.” This is nonsense.
posted by three blind mice at 3:49 AM on September 24, 2013 [2 favorites]


perhaps to make the Republican nominee’s chance of victory appear brighter.

Objection! Speculation! And I know a lot of Republican supporters are dumb but that would have to be the frigging dumbest bang-for-buck decision, ever. A betting pool that size would require vast sums of money to substantively shift, and further would yield only the most nebulous and tremulous of results.

I mean, people study this shit for a living - and every paper I've read that deals with it argues betting pools follow public sentiment. The evidence that they play any role in leading it is very, very slim.

I think a liberal (ha) application of Occam's razor is needed here - someone really want Romney to win and believed he could.
posted by smoke at 3:55 AM on September 24, 2013 [2 favorites]


It did seem weird to me that The odds for Obama winning re-election were so low for so long, however. Just my perception, and I always was assuming Nate Silver was going to be proven correct. I wondered at the time if there were a difference between foreign perceptions of the progress of the election and those of citizens here.
posted by newdaddy at 4:00 AM on September 24, 2013 [1 favorite]


I agree, smoke. I'd say somebody took the Fox News view that Romney would win, saw the Intrade line going to Obama because of all those poor, deluded Democrats betting against reality, and figured this would be a particularly poignant way to cash in on their stupidity. Somebody with a lot of money, and a lot of trust in Fox News.

They're cured of at least one of those afflictions now, at least.
posted by GhostintheMachine at 4:04 AM on September 24, 2013 [9 favorites]


Seems to me that the presidential betting market should always lean toward the more economically conservative/libertarian candidate just because conservatives tend to A) have more spending money and B) believe in the power of markets.

So I think in the GOP primary, it would be smart to put money on people like huckabee who are christian conservatives, but not economically conservative and obviously the democrat in the general. If you really want to make a killing, just bet on Anybody But Rand Paul in 2016, as long as you can afford to ride out the inevitable bubble that'll happen in the beginning of the race.
posted by empath at 4:22 AM on September 24, 2013 [2 favorites]


In comparison to the almost $900m spent on television ads by both parities during the same election cycle, it doesn't seem plausible that $7m spent placing bets on Mitt represents any real serious attempt "to manipulate beliefs about the odds of victory in an attempt to boost fundraising, campaign morale, and turnout.” This is nonsense.

That does not follow. It's your reasoning that seems to be nonsense. Explain how the largeness of both sides' TV ad budgets means that one guy can't spent $7M to make Romney look good on InTrade?
posted by JHarris at 4:24 AM on September 24, 2013 [4 favorites]


I dunno. It's a relatively small amount of money compared to the whole, but it seemed like pundits were bringing up that Intrade thing constantly during the election, especially as far as Obama's chances not looking as good as they ought to be. Trying to sway that commentary--I can see it being worth money. I do, however, suspect that the person probably also expected to be right.
posted by Sequence at 4:24 AM on September 24, 2013 [5 favorites]


The only people who can afford to be this bad with money are billionaires.

But given how badly all that SuperPAC money got spent, I wouldn't be totally surprised if this was a Rove error. It would certainly explain his election night incredulity.
posted by anotherpanacea at 4:25 AM on September 24, 2013


Just my perception, and I always was assuming Nate Silver was going to be proven correct.

It needs to be said, Nate Silver was not proven correct. There was a non-zero chance that Romney could have won. He could have beaten the odds, and it wouldn't say anything about the rightness of Silver's methods. Nate Silver knows what a 5% chance of winning means: roll a natural 20 and we have a Republican president. Critical hits happen, sometimes.

I bring this up because, if Romney HAD won, some people would certainly be crowing about how Nate Silver's methods are "dethroned," or "overturned," or "debunked," or some other such rubbish. And, eventually, the longshot will come in, and those pundits will be on-hand to howl like jackals about the nakedness of the emperor.
posted by JHarris at 4:30 AM on September 24, 2013 [32 favorites]


I'm fairly certain that Nate's predictions come in at a much higher rate than his confidence intervals would indicate, to be honest.
posted by empath at 4:32 AM on September 24, 2013


At one point I considered throwing down $500 on Romney just so no matter what happened on election day, it wouldn't be all bad news.
posted by empath at 4:38 AM on September 24, 2013 [6 favorites]


He got his start in betting, where you cannot afford to be any more or less right than you should be. And he said as much back during the election.
posted by JHarris at 4:44 AM on September 24, 2013 [1 favorite]


50 states. He predicted all fifty states.

This isn't a detail, either: Nate Silver's ability to properly read and interpret polling data is going to revolutionize presidential politics largely because there is almost nothing special about Nate Silver: any stats geek can do it, and now elites and the part of the electorate that is paying attention will know that. This puts betting markets in the awkward position of tending to mirror those predictions exactly. The whole shebang is just going to get that much more obviously distinct from the kinds of narratives the media like to pump out about close elections,
posted by anotherpanacea at 4:52 AM on September 24, 2013 [7 favorites]


I mean, people study this shit for a living - and every paper I've read that deals with it argues betting pools follow public sentiment. The evidence that they play any role in leading it is very, very slim.

I think a liberal (ha) application of Occam's razor is needed here - someone really want Romney to win and believed he could.


Don't those two points contradict one another? Aside from everything else, this is obviously not an instance of the markets following the polls.
posted by graphnerd at 5:01 AM on September 24, 2013


Maybe it was one of those "false flag" efforts, a pro-Obama operative spending some cash to frighten on-the-fence Democrats into the idea that Mittens might actually win, so get out the vote!
posted by chavenet at 5:04 AM on September 24, 2013


KOCH? Millions to them are nickles to us.
posted by chance at 5:11 AM on September 24, 2013


Aside from everything else, this is obviously not an instance of the markets following the polls.

I think the point is that people weren't going to base their votes on what they saw in the betting pool. The betting pool would not have led the vote. That there was distortion in the betting pool comes from the fact that the betting pool was not "one person, one dollar."

The idea that somebody was "hyping" Romney in order to make Romney win is only a hypothesis - and, if true, that somebody would be a moron.

Hanlon's Razor: "never attribute to malice that which is adequately explained by stupidity." There were many reports of how Romney HQ was mostly shocked by the results on Election Day. Many Romney supporters, including Mitt himself, really did think that their guy was going to win. I would bet a dollar that our mysterious multimillion dollar loser really did think that he was going to clean up, by betting on the longshot.
posted by Sticherbeast at 5:12 AM on September 24, 2013 [7 favorites]


I think that the much simpler, more logical explanation is that, like many conservatives in the Romney campaign and elsewhere, he bought into the reality distortion field that insisted that Mittens had a chance. Mitt had about one good night in the campaign, at the first debate(although it would be more accurate to say that Obama had one bad night), and suddenly all of his supporters, plus everyone in the media who could make bank out of it being (or being made to seem) neck-and-neck started screaming that it was too close to call. People started taking the "Unskewed" cretin (the one who made fun of Nate Silver's alleged lack of masculinity) seriously. You even had right-wing bloggers live-blogging election night in anticipation of a Romney upset, which of course turned out to be pretty schadenfreudalicious.

So someone--possibly one of the people in the financial industry who refused to credit the Obama Administration's bailout with saving their jobs--thought they'd pick up a little easy money? Not unlikely or shocking at all.
posted by Halloween Jack at 5:23 AM on September 24, 2013 [5 favorites]


Or, you know, what Sticherbeast said.
posted by Halloween Jack at 5:25 AM on September 24, 2013


I have absolutely no idea how to even begin to evaluate the relative merits of the "Good faith, skewed perception" or "Market manipulation" theories. And honestly I don't have any confidence that it couldn't have been something else entirely. Like, I don't know, some kind of money laundering trick or something.
posted by aubilenon at 5:26 AM on September 24, 2013


50 states. He predicted all fifty states.

Several of which Silver himself predicted as very near coinflips, and all but one or two were in common with every other major prediction system. It's very difficult to judge a presidential election prediction system because there is only a result every four years and because the different systems only differ in terms of how likely they think a win is for the favorite rather than disagreeing about who the favorite is. In fact, ironically a Romney win would have proven Silver more right than guessing all fifty states correctly, because several of the other prediction systems gave Romney a nearly zero percent chance of winning. Another difference between prediction systems is how well they track the probability of a win over the time of the campaign, but again there are too few results to really study how accurate they are. The congress races might be a better way to judge election prediction systems, because they happen more often and there are more of them, but they have other problems (less polling data, less surprises overall in terms of who wins).
posted by burnmp3s at 5:27 AM on September 24, 2013 [5 favorites]


Maybe it was just some conservative rich person saying "fuck you" to their liberal heir.
posted by aubilenon at 5:28 AM on September 24, 2013 [4 favorites]


This is a reflection of the broader Republican strategy to rig polling results in their favor, and throw into question the accuracy of "mainstream" (ie: not Republican operatives) polling.

It worked really well for a number of trial runs, most notably Scott Brown's upset of Coakley, which was arguably sparked by both a tepid Democratic candidate and a wildly overoptimistic Rasmussen poll which breathed life into the campaign.

However, once the Dems found a candidate who could appeal to the blue collar rank-and-file, it was all over for Brown, despite the "unskewed" polls presented by GOP operatives. This was the pattern for the 2012 elections, where the Republicans tried to build momentum or derail Democratic momentum with oddball polling and attacks on accurate polls - and the betting market was an unofficial poll that was being very closely monitored. It was also conveniently susceptible to manipulation with straight, hard cash.

Unfortunately, this strategy failed in hilarious fashion, as GOP campaign co-ordinators and candidates had no idea how badly they were being outplayed in the ground game, because they had to pay lip service to the phony polling and analysis and make-pretend it was real.
posted by Slap*Happy at 5:39 AM on September 24, 2013 [4 favorites]


A fool and his money.
posted by Bromius at 5:40 AM on September 24, 2013


I feel better somehow knowing that this delusional idiot, whoever he is, has a little less money to throw around now. If it's one of the Kochs, maybe they'll have to buy the '68 instead of the '65 (totally pulling vintages out of my ass here). Hope it goes down chokingly.
posted by bitter-girl.com at 5:45 AM on September 24, 2013 [1 favorite]


Sorry I haven't been posting that much lately. Long story, but I've had to start working again.
posted by BobbyVan at 5:46 AM on September 24, 2013 [24 favorites]


THANK YOU, mysterious stranger!
posted by Lemurrhea at 5:51 AM on September 24, 2013


All of these models take polling information and then make some assumptions about voter turnout, i.e., the composition of the people who actually turn out on election day. As I recall it, the Republican mantra all through the election season was that many pollsters were using a model of the electorate skewed towards the Democrats. Karl Rove, on election night, was still invested in this delusion, and refused to believe it when Fox called the election for Obama. So it doesn't seem too far-fetched to think that there were other rich conservatives who believed the same thing, and thought they could make a killing on Intrade.
posted by Pararrayos at 6:07 AM on September 24, 2013 [1 favorite]


Here's my academic paper on the subject:

Ha-haa. (Muntz 1990)
posted by Rock Steady at 6:09 AM on September 24, 2013 [19 favorites]


Just to be clear, we're counting Romney out at this point? Where's your faith! Is this not a Christian nation? I mean the impeach Obama movement will catch on at any moment and we can get an actual US citizen in there, right? Once we get this Obamacare defunding behind us we can move onto the actual will of the people and get Obama out of the White House. Romney stands a chance then, right? Come on people! We can make this happen.

Also, they are coming for your guns, your social security, your 401(k), your lightbulbs, your healthcare, your jobs, and they are letting the terrorists win by forcing everyone to use ethanol! Please get into the body cavity search line, have a shot of breast milk to prove it's not explosive (we don't care if it's yours or not), and take your beatings like a man. Anything else is un-American!

With God on our side we can't lose. Romney 2014 or bust!
posted by cjorgensen at 6:11 AM on September 24, 2013 [1 favorite]


I dunno. It's a relatively small amount of money compared to the whole, but it seemed like pundits were bringing up that Intrade thing constantly during the election, especially as far as Obama's chances not looking as good as they ought to be. Trying to sway that commentary--I can see it being worth money.

I agree with Sequence. My guess would be that the bets were less about InTrade itself than about giving a narrative-obsessed media a "Romney is gaining momentum!" story to blather about. The signal wasn't intended for the markets or for the consumers of campaign ads, but for the media.

(I also agree with Sticherbeast and Halloween Jack that the individual probably really believed Romney was going to win.)
posted by Gelatin at 6:13 AM on September 24, 2013 [1 favorite]


BobbyVan: "Sorry I haven't been posting that much lately. Long story, but I've had to start working again."

I really have to hand it to you, man, for being able to have a little fun with yourself. Bravo!
posted by notsnot at 6:16 AM on September 24, 2013


Haven't read the paper yet, but my first thoughts were money-laundering, and/or some GOP-affiliated grifter committing fraud with donors' money. Did the paper's authors analyze where this mysterious trader's money ended up?
posted by 1970s Antihero at 6:23 AM on September 24, 2013


Not surprising. There were many, many people CONVINCED that Romney was going to win, and were genuinely amazed that he didn't, in defiance of all polls, predictions, and public sentiment.
posted by Curious Artificer at 6:28 AM on September 24, 2013 [1 favorite]


Did the paper's authors analyze where this mysterious trader's money ended up?

In the profits of the betting agencies, I'm guessing.
posted by acb at 6:29 AM on September 24, 2013


some GOP-affiliated grifter committing fraud with donors' money.


Agreed. This doesn't sound like something you'd do with your own money.
posted by ian1977 at 6:31 AM on September 24, 2013


So you tell some GOP donors that you're going to invest a few million dollars in Intrade to manipulate the reporting on the race, depressing the price of Obama stock, which you then buy at a discount with a secret set of accounts, which then necessitates you asking for more money to manipulate the market more-rinse, wash repeat.
posted by empath at 6:36 AM on September 24, 2013 [1 favorite]


pleasebethekochbrotherspleasebethekochbrotherspleasebethekochbrotherspleasebethekochbrothers
posted by EmpressCallipygos at 6:42 AM on September 24, 2013 [3 favorites]


Even if it were this is about an hour's profit for them. Less I believe. This would be like taking joy in me dropping a $20. Sure, kind of sucks, but it's not going to ruin my day.
posted by cjorgensen at 6:53 AM on September 24, 2013


the Fox News view

Do viewers know that Fox News is partially owned by a Sharia Law Saudi Prince?

Once one establishes the above as a truth then listen to David Brin 49 minutes in. Feel free to take the idea expressed by Mr. Brin and use that as a talking point with your local Fox paranoid.
posted by rough ashlar at 6:59 AM on September 24, 2013 [1 favorite]


The most plausible reason for the betting, the authors conclude, is that “this trader could have been attempting to manipulate beliefs about the odds of victory in an attempt to boost fundraising, campaign morale, and turnout.”

A better way to do this would be to give it directly to right-aligned Super-PACs. Seems more likely someone actually believed the "unskewed" polls or decided that $4-7 million was worth the risk of the potential return given Romney's longshot odds.
posted by spaltavian at 7:13 AM on September 24, 2013 [1 favorite]


I find it completely plausible that a rich dude would manipulate Intrade to try to get some cheap advertising for Romney. After all, the cable news anchors were treating Intrade as gospel.

I am surprised they managed to spend as much as $7 million on this "cheap" plan though. I recall the daily volumes on Romney contracts being in the $5k range. There must have been some side bets going on that I do not understand.
posted by miyabo at 7:14 AM on September 24, 2013


Maybe the market was manipated. Maybe it was just putting one's money where one's wishful thoughts are.

Either way, this suggests that there is money to be made in this market next time around.
posted by vorpal bunny at 7:16 AM on September 24, 2013


It's easy with the election over to say this was a suckers bet, Silver was right and Obama was a lock.....but on election night I believe every single person watching had some nagging fear/hope it could go the other way, however small, it was there.

This poor sap likely made a bad, hopeful gamble on that emotion.
posted by BlerpityBloop at 7:19 AM on September 24, 2013


Floyd Mayweather. He makes crazy bets like this and tweets pics of his winning slips.
posted by brent at 7:19 AM on September 24, 2013


I really don't have any sympathy for this 'loser', because I'll bet (ha!) he took the whole thing as a tax write-off, and came out of it just fine.
posted by easily confused at 7:26 AM on September 24, 2013


Either way, this suggests that there is money to be made in this market next time around.

Well yeah. When I was a teenager, I bought a copy of Larry Merchant's The National Football Lottery, which (spoiler) is about betting on football. I don't know what I was thinking. I know zero about football and care slightly less than that, but perhaps I thought I would get rich betting on it anyway.

As far as I could tell his betting system boiled down to "bet on away team underdogs." Period. This worked for him because the fans of the home team favorites would always overbet on their local team and drive up the line. His teams didn't always win their games, but he still usually won his bets.

If anything else in this world is subject to that kind of irrational overexuberance its conservatives, with their quixotic insistence that this time they've finally got a real conservative, (not like that last guy, who just said he was a conservative to trick them into voting for him and turned out to be a socialist when all was said and done) and liberal media elites are lying because the real Americans will rise up to acclaim him and everything will change back to the way it's supposed to be.
posted by Naberius at 7:28 AM on September 24, 2013


Either way, this suggests that there is money to be made in this market next time around.

Lemurrhea took advantage of this in 2012.
posted by Elementary Penguin at 7:29 AM on September 24, 2013 [1 favorite]


I also made a couple of hundred dollars betting against people like this (maybe this guy?) on Intrade.

There was a great article on Buzzfeed (no really!) about this a few months back.
posted by caek at 7:42 AM on September 24, 2013


It's more money than I'll ever see in a lifetime, but I'm sure it was just pocket change to the bettor. This really isn't a great mystery or anything. If you have a couple hundred million and you think Romney is going to win, plunk down your $4-7 million.

The framing makes this sound like an insidious manipulation, but some rich dude was just playing a bet. Meh.
posted by Admiral Haddock at 7:43 AM on September 24, 2013


The paper points to several factors which might indicate that the trader was doing market manipulation, and not just looking for financial gain. From the first whole paragraph on page 4:
  • This trader accounted for one-third of all bets placed on Romney during our observational window. (So not just some money plunked down, but lots and lots of bets)
  • This position was accumulated by placing large bids for Romney and large offers for Obama that effectively created a firewall, preventing prices from moving in response to incoming information. This resulted in remarkable stability in Intrade prices for several hours on Election Day, and at other critical moments of the campaign, even as prices on Betfair were moving sharply. (At least in a normal market this shouldn't make money, quite the opposite really.)
  • On Election Day, these orders were removed just as voting ended in Colorado, the last swing state to close its polls. The effect was a sharp price movement and immediate convergence to the Betfair odds. (Sounds like "end of the campaign" to me)
Considering the thousands of articles and web pages which discussed the Intrade activity during the run-up to the election it is (IMHO) likely that the motive was influencing the media discussion, and not profit. Or at least, not profit alone.
posted by Baron Humbert von Gikkingen at 8:06 AM on September 24, 2013 [13 favorites]


The great tragedy is that it looks like we won't have a viable replacement for Intrade before the next presidential election to see if this plays out again.
posted by skewed at 8:11 AM on September 24, 2013


woah, what happened to Intrade? It sounds from their site like possibly a couple people absconded with the bank...
posted by kaibutsu at 8:19 AM on September 24, 2013




Keep in mind that Nate Silver put the odds for a Romney win at 1-in-3, just a few days beforehand. That means a bet of $5.5m is a likely loss of about $3.7m.. . which, late in the game, might seem an acceptable risk to take in order to influence the turn out of not just Obama vs. Romney, but also all the downticket races as well.

There's a reason that people are encouraged to give big and give early when it comes to major races. There is a multiplicative effect for doing so, because big money given early translates into more followers and more donations later, as well as greater establishment of your side of the argument early on. It pays to be the first one to frame an argument, or to paint the public perception of your opponent, before they get a chance to do so themselves.

But what do you if it's the last days of an election in which you've already maxed out contributions, the airwaves are already awash in a drone of increasingly less effective ads, but you're a true believer who wants to make a difference?

Well, you might make a wager like this...
posted by markkraft at 8:27 AM on September 24, 2013


I still don't understand why people think, in theory, InTrade would offer any better information than just reading the polls. The people making trades don't have any better information than the polls. And there's no reality feedback mechanism for the market to correct for a bubble until the election results come in and it's too late.
posted by straight at 8:33 AM on September 24, 2013


Keep in mind that Nate Silver put the odds for a Romney win at 1-in-3, just a few days beforehand.

What do you mean by "just a few?" That's a 66% chance of Obama winning, and is at odds with my memory. My assumed meaning for few tops out at five. (Couple: two. Few: around three to five. Several: a range averaging at seven.)

Silver rated Romney's chances at 40% on October 12, but that was at his height. Going back to the NYT archives of Silver's blog reveals that the Thursday before the election, he rated Obama at better than 80%.
posted by JHarris at 8:43 AM on September 24, 2013


I still don't understand why people think, in theory, InTrade would offer any better information than just reading the polls.

I think the hope is that the betters on Intrade or the Iowa Electronic Markets are going to be Rove and Plouffe and people involved in the campaigns and people working for polling organizations and political-behavior experts and so on instead of the sorts of people who would otherwise be betting on the horses or smoking like chimneys as they plunk quarters into a slot machine.
posted by ROU_Xenophobe at 8:44 AM on September 24, 2013


I still don't understand why people think, in theory, InTrade would offer any better information than just reading the polls.

I believe the theory is that by putting their own actual money on the outcome, InTraders are more vested in it and therefore more likely to vote (and to encourage other people to vote and to donate to their candidate, etc.), whereas polling just asks people, "Hey, you gonna vote?" and lots of people will say "Sure!" just so they don't look apathetic to a stranger.
posted by Etrigan at 8:45 AM on September 24, 2013 [1 favorite]


GhostintheMachine: “Somebody with a lot of money, and a lot of trust in Fox News. They're cured of at least one of those afflictions now, at least.”

I wouldn't bet on that.
posted by koeselitz at 8:47 AM on September 24, 2013


Good.
posted by Flunkie at 8:48 AM on September 24, 2013


t's easy with the election over to say this was a suckers bet, Silver was right and Obama was a lock.....but on election night I believe every single person watching had some nagging fear/hope it could go the other way, however small, it was there.


Am I reading this right? That everyone secretly hoped Obama would lose? Or should it be read that: everyone secretly hoped that the person they were rooting for would lose?
posted by MisantropicPainforest at 8:54 AM on September 24, 2013


t's easy with the election over to say this was a suckers bet, Silver was right and Obama was a lock.....but on election night I believe every single person watching had some nagging fear/hope it could go the other way, however small, it was there.


Am I reading this right? That everyone secretly hoped Obama would lose? Or should it be read that: everyone secretly hoped that the person they were rooting for would lose?


I think it means: Obama supporters had a nagging fear Obama would lose, Romney supporters had a nagging hope Obama would lose. Neither of them really believed it, but there's always that chance.
posted by Lemurrhea at 9:02 AM on September 24, 2013 [2 favorites]


AH OK! I CAN'T READ. thanks.
posted by MisantropicPainforest at 9:03 AM on September 24, 2013 [1 favorite]


Obama was like the Harlem Globetrotters, Romney the Omaha Hubcaps. You have a pretty damn good idea who is going to win, but there is always that chance that an upset could happen. That sliver of a chance, however brief and fleeting, i imagine, ran through everyone's mind on election night and the days leading up to it. No one was 100% certain of the result, and the gambler we are discussing put a bet on the Hubcaps.

Great article though, but I don't think it's a conspiracy, just a hopeful fan.
posted by BlerpityBloop at 9:09 AM on September 24, 2013


"What do you mean by "just a few?" That's a 66% chance of Obama winning, and is at odds with my memory. My assumed meaning for few tops out at five."

On Nov. 3rd, there was an interview that Nate Silver did, where he mentioned a one-in-three chance for Romney.
posted by markkraft at 9:15 AM on September 24, 2013


I spent a lot of time during the runup to the 2012 election obsessing about this. Mostly because I had about a thousand dollars riding on Obama bets. I recall when I got in, maybe a month before the election, one person had been taking big positions on Romney every morning, driving Obama's price/odds down to around 50%. This when Nate Silver had Obama much higher than that, maybe low 80s. At the time I couldn't imagine any reason for someone doing that other than to drive a media narrative that the race was a toss-up (a narrative the pundits obviously loved and ran with at every opportunity). It just made no economic sense, the way the bets were placed. I mean, I might have bet on Romney if the odds were more favorable, but at 50/50? Crazy, even for die-hards. I guess ultimately who knows the reason, but it sure was sweet taking their money.
posted by bepe at 9:23 AM on September 24, 2013 [1 favorite]


On Nov. 3rd, there was an interview that Nate Silver did, where he mentioned a one-in-three chance for Romney.

That may have been published on November third, but the interview took place well before that.
posted by yoink at 9:24 AM on September 24, 2013 [1 favorite]


If only he'd waited a few years, he could have backed the Atlas Shrugged kickstarter instead.

The Atlas Shrugged kickstarter should be called Bootstrapper, and only the person who started it should be allowed to put money into it.
posted by Atom Eyes at 9:36 AM on September 24, 2013 [7 favorites]


$7 million is nothing. 80 billionaires wasted more than that flying their private jets to Logan airport on election day for the sure-bet Romney victory party. Any one of them could have been dumb enough to lay down that bet. Just goes to prove that they aren't the brilliant businessmen they think they are.
posted by JackFlash at 9:47 AM on September 24, 2013 [3 favorites]


Baron Humbert von Gikkingen got it above. There was obvious manipulation.

Obama was like the Harlem Globetrotters, Romney the Omaha Hubcaps. You have a pretty damn good idea who is going to win, but there is always that chance that an upset could happen. That sliver of a chance, however brief and fleeting, i imagine, ran through everyone's mind on election night and the days leading up to it. No one was 100% certain of the result, and the gambler we are discussing put a bet on the Hubcaps.

Not to pick on you specifically since a lot of people are thinking of this as a gambler rather than a manipulator, but to work within your analogy, read this sentence from the paper again: This resulted in remarkable stability in Intrade prices for several hours on Election Day, and at other critical moments of the campaign, even as prices on Betfair were moving sharply.

Our mystery person here is either manipulating InTrade, or they are betting on the Hubcaps. They are pretty wealthy, since there are millions of dollars involved. It seems a reasonable assumption that they are probably at least a little shrewd at gambling / markets.

Why would this mystery person throw spectacular amounts of money at InTrade to hold a value, when BetFair was responding? In other words, when InTrade is offering 2:1 odds on the Hubcaps and BetFair is offering 10:1 odds, our mystery person is plowing money into the bet on InTrade. If they are even a little bit shrewd -- defining shrewd so low as to mean "knows of the existence of both InTrade and BetFair" -- they are wasting incredible amounts of money if their bet comes in. There is no rational reason for a gambler to bet at 2:1 when they could get 8:1 or 10:1 odds down the street on the exact same outcome, much less to plow money in to the 2:1 bet to maintain the 2:1 odds.

If there was a hopeful Romney fan on the loose, they would have been plugging money into BetFair until it was offering the same odds as InTrade, rather than the reverse. There is, on the other hand, a very rational reason to manipulate the most prominent and widely-cited "prediction market" to provide a positive outlook for your favoured candidate while ignoring the smaller markets.
posted by Homeboy Trouble at 9:57 AM on September 24, 2013 [14 favorites]


You even had right-wing bloggers live-blogging election night in anticipation of a Romney upset, which of course turned out to be pretty schadenfreudalicious.

Links, please.
Pretty please?
posted by Atom Eyes at 10:20 AM on September 24, 2013 [1 favorite]


That paper is kinda over my head.

I'm of the opinion that nobody was really shocked aside from donors. I don't buy that republican pollsters are that bad. It isn't like Nate Silver is the only person who can read numbers.I think they juked the stats to keep the money flowing in. That included manipulating intrade, as some people strangely put stock in intrade.

Then again I pretty much think the entire republican field was a money grab from start to finish.
posted by Ad hominem at 10:30 AM on September 24, 2013 [2 favorites]


The most plausible reason for the betting, the authors conclude, is that “this trader could have been attempting to manipulate beliefs about the odds of victory in an attempt to boost fundraising, campaign morale, and turnout.”
A darker view is possible: if Republicans had managed to steal it somehow, these results and the really ridiculous Gallup polling would have been crucial parts of the effort to allay suspicion.
posted by jamjam at 10:31 AM on September 24, 2013 [4 favorites]


Perhaps it was an Obama voter hedging against an undesired outcome?
posted by pharaohmagnetic at 10:39 AM on September 24, 2013


Obama was like the Harlem Globetrotters, Romney the Omaha Hubcaps.

You mean The Washington Generals.
posted by EmpressCallipygos at 10:40 AM on September 24, 2013


Harlem Globetrotters games are fixed, aren't they?
posted by box at 10:42 AM on September 24, 2013 [1 favorite]


The Generals have won occasionally.

Win No. 1: "The fifth of January 1971. University of Tennessee at Martin. I remember it like last week. My team played great that night, and we were up 12 with two minutes left, but the Trotters stormed back to take a 99-98 lead with 30 seconds to go. I called timeout and told my team I wanted the final shot. With 10 seconds left I took a two-hander from 20 feet. Swish. Then Meadowlark's final shot rimmed out. We won. Everybody was stunned. Let me tell you, beating the Globetrotters is like shooting Santa Claus. Later the press blamed the loss on the clock operator who hadn't stopped the clock during Trotter routines early in the fourth quarter. Could be. The timekeeper's name was Chuck Klotz."

See here.
posted by Ghostride The Whip at 10:51 AM on September 24, 2013 [1 favorite]


Krusty's Accountant: Let me get this straight. You took all the money you made franchising your name and bet it *against* the Harlem Globetrotters?
Krusty the Clown: [miserable] Oh, I thought the Generals were due!
[watches the game on TV]
Krusty the Clown: He's spinning the ball on his finger! Just take it! Take it!
[the Globetrotters score]
Krusty the Clown: That game was fixed! They were using a freakin' ladder, for God's sake!
posted by FJT at 11:30 AM on September 24, 2013 [1 favorite]


The Generals have won occasionally.

that's as may be, but my point was that "Washington Generals" was their name, as opposed to the Harlem Globetrotters playing the "Omaha Hubcaps" which was a team that didn't exist.
posted by EmpressCallipygos at 11:33 AM on September 24, 2013


The framing makes this sound like an insidious manipulation, but some very stupid rich dude was just playing a bet. Meh.
posted by Mental Wimp at 11:42 AM on September 24, 2013


I know a number of people who are able to make sound judgements in addressing most aspects of life and also a deluded loons about romantic partners and politicians.

Several of them would argue all night that although Hillary Clinton's campaign was a fincial disaster, it was mathematically impossible on the delegate side, and polls showed she was not going to win, somehow she would be the candidate. And then they all (my friends, specifically, not "they all" as in everyone) laughed themselves into frothy state of smug when Republicans were surprised about Mitt's loss.

People are entirely capable if investing heavily in their blind spot.
posted by Lesser Shrew at 11:50 AM on September 24, 2013 [1 favorite]


It's worth noting that the cost of the investment to manipulate the market is offset to some extent by the investor's belief about the chances of winning. A 25% chance of a Romney victory is represented in InTrade by a 25-cent share that pays off at $1 if he wins. In order to manipulate the market, you have to pay (let's say) 50 cents for that share instead, but it's not worth nothing, it's worth 25 cents -- or more, if you think the market has Romney's chances too low anyway.

So the expected cost to you of manipulating the market depends on how likely you think your candidate is to win. If you invested $7 million to buy Romney shares at 50 cents, when you actually believed that Romney had a 40% chance of winning, you could think of it as costing you $1.4* million to manipulate the market, plus a fair bet on the side for $5.6 million. That's still a lot of money, but (assuming you can afford the fair bet) it's a lot less than $7 mil.

Now if you're wrong about that, and Romney's true chances are only 20%, you're actually paying $4.2 million to manipulate the market and making a fair bet for $2.8 million. So the really interesting part is, both theories come into play at once: someone might be attempting to manipulate the market in favor of their candidate, but also invest way more in the project than they intend to, because they overestimate their candidate's chances of success.

* The formula I'm using here is, manipulation cost = [amount invested] - [amount invested] * [estimated chances of winning] * ( 1 / [cost paid per share] ).
posted by jhc at 12:01 PM on September 24, 2013 [3 favorites]


jhc: Ah, and the calculus for your expected return is even more complex than that, if manipulating the market actually improves Romney's odds.

But it doesn't so never mind.
posted by aubilenon at 12:16 PM on September 24, 2013 [1 favorite]


If they are even a little bit shrewd -- defining shrewd so low as to mean "knows of the existence of both InTrade and BetFair"

I am not the least bit shrewd. sob
posted by Naberius at 12:34 PM on September 24, 2013


@EmpressCallipygos, the Washington Generals. Dang, i was going to go with 'senators' that but was too lazy to google and was sure that was an actual baseball team (which google now confirms). And I've actually been to one of their 'games' as a kid.

But, yes, my point was that on 'game night' there were fans of both teams in the audience that knew the likely outcome but still made bets. My point was explained above, but even with absolute confidence of your average Obama voter, there was a glimmer of panic that an upset could happen.....and a glimmer of hope Romney would upset from his side.

So...more to the article's point, I don't think that the InTrade gamble was made for suspect reasons other than 'this could go the other way, and the odds are a huge pay-off, why not take a chance'. There are MUCH more nefarious ways of spending $4mm to influence the outcome of an election, but let's not discount the enthusiasm and hope of someone with money to burn.
posted by BlerpityBloop at 12:53 PM on September 24, 2013


It also seems to be a GOP strategy these days to manipulate ALL. THE. THINGS. no matter how small, in the theory that the momentum effect makes it add up to more than the sum of the parts. It also defocuses the resistance.

I can totally believe the "manipulate Intrade for the sake of the media story." "Rich guy makes a dumb bet with his pocket change" is plausible, but seems less likely given the details of the trades.
posted by ctmf at 1:47 PM on September 24, 2013 [4 favorites]


Never attribute to malice or stupidity what you can attribute to both at once.
posted by chortly at 2:30 PM on September 24, 2013 [2 favorites]


Atom Eyes, the only one I still remember is this one. Not a direct link because he doesn't deserve the page hit.
posted by Halloween Jack at 2:31 PM on September 24, 2013 [1 favorite]


I think the hope is that the betters on Intrade or the Iowa Electronic Markets are going to be Rove and Plouffe and people involved in the campaigns and people working for polling organizations and political-behavior experts and so on

Is the idea that most people talking about polls are trying to spin for their candidate and that Intrade gives you a better view of what political junkies really think?
posted by straight at 3:15 PM on September 24, 2013


"It also seems to be a GOP strategy these days to manipulate ALL. THE. THINGS. "

*snicker*.

Democrat Governor of California Jerry Brown manipulates the ballot
posted by BlerpityBloop at 5:13 PM on September 24, 2013


Well, that's one guy, and one thing. What else ya got?
posted by box at 5:59 PM on September 24, 2013


At one point I considered throwing down $500 on Romney just so no matter what happened on election day, it wouldn't be all bad news.
posted by empath at 7:38 AM on September 24 [5 favorites +] [!]

I was thinking... if people really made bets on inTrade in favor of the guy they wanted to win, that's a classic Texas hedge... your guy wins and you make some $$$, your guy loses, and not only are you upset, but you lose money on top of it...

I like to fancy that the blip in Romney support in October was actually an Obama supporter buying some protection in big size ... in the off chance that he lost, they would have at least gotten some cash to compensate...
posted by pravit at 7:55 PM on March 11 [+] [!]

posted by pravit at 7:41 PM on September 24, 2013


>The 17th century French king also proclaimed — a la Brown and Democrats — "It is legal because I wish it."

From the Jerry Brown article. This comparison isn't correct since Brown and Democrats did NOT enact laws simply because they wished to. The proper legislative process was followed.

The LA Times should tag their opinion pieces a bit more clearly, I would suggest.
posted by mikelieman at 3:29 AM on September 25, 2013 [1 favorite]


I still don't understand why people think, in theory, InTrade would offer any better information than just reading the polls.


Close to actual elections, Intrade tended to mirror the aggregate poll results, so it wasn't that useful to make predictions. Where Intrade could be helpful was in the long run-up to elections, where polls were infrequent and unreliable. Best example I can think of is Herman Cain, who for a 2-3 week period, actually led a number of reputable polls for the Republican nomination. During this time period, his Intrade odds never climbed above about 10% to win the nomination, and actually spent most of that time between 2-8%. That's because, pollsters can't hedge their polling data with statements like "Well, right now 34% of likely voters for the Republican primary say they support Herman Cain, putting him ahead of any other candidate, but most of these voters are just idiots who will change their mind and vote for a more establishment candidate the week before the primary".

Bachmann, Cain and Paul all had various moments of surging poll results, but none of them ever had a real shot at winning the nomination, which is why Romney's Intrade odds spent most of the primary cycle between 50-80%, even when polls showed a majority of Republican voters didn't like him and basically wanted anybody else. Recognizing the significance of what polls were actually meaningless was Intrade's strong suit.
posted by skewed at 9:09 AM on September 25, 2013


Who was it that needed Intrade to tell them Herman Cain was never gonna be the Republican nominee?
posted by straight at 12:00 PM on September 25, 2013


The suckers that went long on him winning the primary?
posted by Elementary Penguin at 1:00 PM on September 25, 2013


Who was it that needed Intrade to tell them Herman Cain was never gonna be the Republican nominee?

Well, a number of non-crazy polls had him leading the Republican field for most of October, 2011, and all had him as competitive in terms of support among likely Republican primary voters at that time. Nonetheless, he never had any chance to win the nomination, and this was reflected by his Intrade price which floated around 8-10%.

So, in answer to the question, "Why would people think, in theory, that Intrade could provide better information than just reading the polls?", Herman Cain type situations (which are not rare, just usually not as extreme) would be a prime example of a way that Intrade can beat the polls.
posted by skewed at 2:57 PM on September 25, 2013


The polls asked people who they wanted to win. InTrade asked people who they thought will win.
posted by aubilenon at 3:26 PM on September 25, 2013


My point is that Intrade's reading of the polls was the same as everyone else's at the time. Cain led a few polls, but nobody believed that he was going to get the nomination. Intrade wasn't evaluating the polls any differently or better than every pundit on TV.
posted by straight at 4:10 PM on September 25, 2013


I think you may be overstating the consensus among pundits a little bit. Lots of pundits are idiotic, or at least profess to believe stupid things in order to not be boring and lose their jobs. Intrade could, at least in theory, help someone who doesn't know which pundits are trustworthy. It also did a nice job at cutting through the media bullshit about the seriousness of the Romney's challengers. Even at Romney's low-point his odds were in the 40-50% range for the nomination, and he spent the vast majority of the primary season in the 65-85% range. This was in line with what many pundits said, but many others were pretending that other candidates had a non-zero chance, even after Florida effectively ended the nomination fight.

I'm not saying Intrade was amazingly accurate (I'm glad it wasn't, it made it fun and not too difficult to make money), but there were times that it could cut through a cluttered and conflicting media narrative to create a semi-objective account of what was happening. I think that's at least potentially valuable.
posted by skewed at 4:55 PM on September 25, 2013 [1 favorite]


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