Politics

Trump’s Nomination Odds Improve

Says who, the experts or polls? No, something more accurate — the markets.

Donald Trump’s resounding primary victory in his home state not only improved his position in the primaries, it increased confidence among traders that he will be the GOP nominee for president.

Trump winning a majority of the delegates needed for the nomination was listed at 61 cents at the close of trading Saturday on the online trading exchange PredictIt. That is 17 cents more expensive than on Thursday up from 25 cents April 16.

PredictIt is a prediction market operated by New Zealand-based Victoria University of Wellington that allows people to “invest” in the outcome of political events and other questions. Users can spend up to $850 buying “shares” of outcomes, like whether Trump will be the GOP nominee. For every “yes” purchase, there must be a corresponding “no.” The share prices fluctuate similar to the prices of stocks and move up or down depending on traders’ reactions to real-world developments.

Users can sell their shares at any time to get out of the market, taking a profit or loss, or wait until the market closes after the final outcome and collect based on the price of the share at that point.

The site launched just before the 2014 midterm elections with about 22 users, and now has more than 30,000 active traders, according to officials at Aristotle, a voter data mining company that helps support PredictIt. Company spokeswoman Brandi Travis said people risking their own money tend to more accurately predict elections than polls and other conventional measures.

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“People have been studying prediction markets for 25 years or so,” she said. “The consensus is that they are about 75 percent more accurate than polls.”

As traders view that Trump’s prospects of gathering a majority of the delegates through primary voting has improved, the price of a brokered convention predictably is falling. A brokered convention share closed 30 cents on Saturday, down 11 cents from its close on Thursday. That is down from 56 cents on April 15. Shares have dropped a total of 49 cents since Sen. Ted Cruz won the April 5 Wisconsin primary. That had sent shares to an all-time high of 79 cents.

[lz_table title=”GOP Nomination Share Prices” source=”PredictIt”]Candidate,Price
Donald Trump,75 cents
Ted Cruz,20 cents
John Kasich,6 cents
Paul Ryan,5 cents
Mitt Romney,2 cent
Marco Rubio,1 cent
Scott Walker,1 cent
[/lz_table]

Overall, shares of Trump eventually winning the nomination stood at 75 cents at the end of Saturday, up 10 cents from Thursday. By comparison, Cruz shares were selling for only 20 cents — down 3 cents. The price for Gov. John Kasich is 6 cents a share. That is only a penny more than House Speaker Paul Ryan (R-Wis.), despite his vehement denials that he wants the job.

Trump appears to be a near-lock to win all five primaries on Tuesday, according to the market. He was trading at 97 cents a share to win Connecticut and Pennsylvania on Saturday and listed at 96 cents for Rhode Island, 98 cents for Delaware, and 94 cents to win Maryland. The second-place candidate in each state was trading at 5 cents or less.

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The PredictIt forecast is in line with PredictWise, an algorithm created by Microsoft Research economist David Rothschild, who uses results from polls, prediction markets, and European betting sites to forecast election outcomes. As of midday Sunday, the site listed Trump as a 75 percent favorite to win the nomination.

Rothschild told PBS earlier this year that markets have an advantage over “the smartest people just dealing with polling or historical data.” He compared prediction markets to polls in the 2012 elections.

“You see something that is more accurate than any collection of pundits or statistical polling averages, and extremely well-calibrated,” he said.

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