Friday, 1 July 2011

Betting Against Karzai Is Paying 20 To 1

Should Afghan President Hamid Karzai depart office before midnight, eastern standard time, on June 30th, one lucky punter will make $50.  If Karzai’s presidency stretches into July, they will lose their $2.50 wager.  Intrade, the world’s largest online prediction market, has placed the odds of the Karzai administration making it to next month at 95 percent.  A seemingly safe bet.

However, as late as 9:18 pm on Sunday, May 2, the Intrade market placed the probability that Osama Bin Laden would be “captured or neutralized” before the end of the year at a paltry 2.7 percent.  Only a half hour later, before President Barack Obama delivered his dramatic address, the market had jumped to 98 percent.  With 40 to 1 odds, Navy Seals weren’t the only ones making a killing that night.

The imperfect flow of information in politics doesn’t make for terribly efficient markets but lucrative opportunities abound for those wielding inside information or an inspired hunch.

Between July and December of 2003, the odds that Saddam Hussein would be captured or neutralized by the end of 2003 had fallen from 53 percent to as low as three percent.  Eight months after the deposed dictator escaped from Baghdad, the trail appeared to have gone cold.  But then, in early December, unidentified Intrade investors began making hundreds of, what appeared to be, long shot bets against Saddam.  Trading volumes spiked 450-fold.  However prices remained undisturbed as there were more than enough eager sellers to take what looked like easy money.

A few days later, Hussein was found in a spider hole near Tikrit.

To read the rest of this article, visit, where it was originally published.   

No comments:

Post a Comment