Weirdness on Intrade

At about 10:00 AM ET this morning, a single investor(using about $18K) swung Romney from about 40 to about 48- for six minutes (this investor would have lost about $1250 in 6 minutes). Then it went back down to 40.

How much to obvious attempts at manipulation affect prediction markets like Intrade? With enough volume, I guess the hope is that such attempts won’t amount to much- and if they do, other bettors will quickly take advantages of prices that are out of wack.

I don’t know how this works. How did he do it? Did he have to buy something? Place a bet? Wouldn’t there have been some sort of transaction fee?

[edit] oh never mind, I didn’t notice the link before.

Intentional manipulation doesn’t make sense to me. Intrade is considered by some a good predictor of the presidential election, but nobody ever claims there’s a cause/effect.

Changing the Intrade price doesn’t affect how people vote.

I think some rich guy really believes Romney’s going to win, and really bet $18K on it.

Yeah, what would the point be of manipulating the market? If you have money to spare, and really feel 40% is low-balling Romney, you make the big investment. Market dynamics, as they are, should revert to what the betting public thinks is the mean, and that is apparently what happened in this case.

There is absolutely no doubt in my mind that the betting markets are being manipulated for the purposes of making Romney look good. Here’s an earlier thread I started about it: http://boards.straightdope.com/sdmb/showthread.php?t=665669

Someone appears in that thread who claims to have made tens of thousands out of the discrepancy.

For the discrepancy to be that big something’s going on imo.

It is not the first time it’s happened either, chris huhne or his backers did something like this in the lib dem leadership election.

You can say that about any one market but not when you have a systemic difference between markets. The difference is so big the arbitrageurs can’t keep up!

See my thread.

What I don’t understand is how does this help Romney? It only makes him look good among a tiny number of people who have heard of intrade and understand it. Far too few to actually have an impact on the election. And yet it costs a fortune.

“Look at the discrepancies between the polls and the markets. The trading markets are more accurate because people will only bet money on their measured self interest. Therefore because they’re so accurate, the polls must be skewed!”

I guess that depends on your definition of fortune. The total election market on intrade is like $15M. So one person can significantly affect the outcome with, say, $1M which is pretty cheap compared to what’s being spent in total. Not, you can say that a fairly circuitous way of discrediting polls is a waste of money, and I would tend to agree, but the dollar amount isn’t that high.

Exactly. What would the point be? Is the thesis that propping him up in one betting market somehow will have an effect on the election or what? That makes no sense to me. I just think it’s different betting pools. Do American punters have easy access to both InTrade and Betfair? I thought Betfair was pretty much no-go for Americans, but InTrade doesn’t care.

Intrade says there’s a 56% chance that the guy behind in the polls will come back and win. That is weird.

Actually he’s ahead in the polls.

You’re being facetious (I hope), but, of course, the bettors are betting on EC results, which determine who becomes president, and Obama still is the slight leader in that. With the data available, I would expect bettors to slightly favor Obama, and that does seem to be the case.

The obvious solution: if you think the line is that wrong because of manipulation, bet the other way and not only will you help move the line in your guy’s favor, but you’ll make a profit.

This is why betting markets tend to be accurate - they are self-correcting.

Well, yes, that’s obvious, as the talk about “arbitrageurs” in this thread shows. There still is a weird discrepancy between InTrade and BetFair, and I assume that’s due to different groups of betting pools. Otherwise, those two should converge, no? If you have easy access to both markets, depending on the vig, you should be able to arbitrage your bets and bring the two markets closer in line to each other.

Or is something wrong with my logic?

Romney tried to bet $10k during the Republican debates. Maybe it was him.

Well we already know the political markets aren’t working well because there is a big arbitrage opportunity between Intrade and Betfair which has apparently existed for weeks. And there now seems to be evidence of direct market manipulation of Intrade. So personally I would be rather skeptical of using it as a guide to the state of the race.

Nate Silver tweets: Intrade is overrated but useful. Same goes for 538. Both add value vs. most horse race coverage, but that’s a low bar to clear.

Important to note, however, that Intrade is an outlier vs. other prediction markets and sportsbooks. http://www.oddschecker.com/specials/polit

Guess I’ll have to do the whole thought dump on Intrade for tomorrow’s column. As for the OP, Romney’s team is claiming they have momentum and in a thin betting market, $100,000 is essentially a reasonably priced ad-buy. Josh Marshall: The Romney camp is trying to pull a classic confidence move to convince gullible reporters that their campaign is on the move and they’re confident of victory — despite the fact that the evidence suggests the race has stabilized or is even, ever so slightly, trending back to President Obama. Karl Rove poured money into California at the end of the 2000 race on the theory that the undecided break for the candidate with the momentum. The Romney team has apparently bought into that. Whether or not the public follows intrade, reporters do and this colors their stories.

MfM concludes:

Ka- ching!

Which begs the question,

if either campaign is buying intrade to try and influence opinion - is it legal?

Again: there has to be significant money involved for this to be true. A London trader showed up, saying he has a $20,000 arbitrage profit locked in. I wouldn’t scoff at that sum, but it’s insignificant to someone willing to spend that much to dine with one of the candidates. If the Koch Brothers have decided that changing the odds on Intrade is good for them, a tiny financial loss is not going to dissuade them.