Prognosticators vs Pollsters: Election 2012 by the Numbers
Every four years we all become "experts" in the oft forgotten political realm, bandwagoneers if you will. Party lines aren't drawn by institutional ties or by your college football allegiance but rather by the compulsion to actually feel involved in our civic duty. Just like the popularity polls in college football, everyone has their own criteria for amassing polling data used to forecast a winner. As a man who lives by the power of numbers, popular opinion rarely resonates in my decision making process. Empirical evidence exists to predict the winner of today's election long before it becomes official. If the betting parlors in far away places taking action on today's vote are any indication, our president for the next four years has already been determined.
It's important to understand betting on any federal or state election is prohibited by the gaming control board here in Nevada. To find political wagering opportunities, a bettor has to explore other options before being afforded the opportunity to bet on the outcome. Polls reflect bias not only in the way they're constructed but also in the way votes are solicited. However, betting houses seeking to make money on an event of this magnitude are forced to respond to the flow of money rather than what a left or right leaning newscast tells them. Over the last week, money has poured in on the incumbent pushing the price from -165 (implying greater than a 55% win probability) to the current price of -450 (implying nearly an 80% success rate). To put into terms I feel most comfortable with as an oddsmaker: the huge move is like a football pointspread being bet from -3.5 all the way up to -10.
"Gallup has released the results of its final poll of the Presidential election finding a “statistical tie” with Republican Presidential nominee Mitt Romney at 48% and Barack Obama at 47% — with polling results now having returned to Oct 1 -7, basically wiping out Romney’s debate gains and registering high approval for Obama’s handling of Hurricane Sandy." - courtesy of the Final Gallup Poll last evening. It's rather interesting when you compare Gallup's results to the prices being offered by betting parlors which suggest a much more lopsided outcome.
If Gallup's poll is the definitive measure and has shown a history of being the most accurate indicator, why would bettors be willing to risk $3.50 to make back $1 on their investment? Here in Vegas we've always been of the mindset money in the marketplace means more than 1,000 educated opinions because if you're not willing to invest, bravado merely makes you"re a blowhard. Oddsmakers have no hidden agenda, no preceonceived notions, nor an inclination to set up a trap for an election which will be determined by the populace.
Another strong indicator on how the general public views an event's likely outcome is Intrade. Betting exchanges strive to balance the market the same way buying and selling of stocks creates stability on the NYSE. As of this morning, "shares" of Barack Obama were trading at their highest in months with the numerical correlation revealing a 71.4% probability he secures a second term. If you take umbrage with how the market being established at Intrade is playing out, understand the gamblers at Betfair, (Europe's most fluid betting exchange), are offering shares of Mitt Romney at an even higher price than the American facing books revealing they think he's a major longshot. I'm hardly a political pundit but when you're using numbers to back up confidence intervals, it's growing harder to argue with the picture being painted by the sportsbooks around the world for election 2012.