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Bettors risking millions online to predict election outcome

We bet on ballgames and poker, the Oscars and the Emmys, so why not the presidential election -- especially one as tightly contested as this one? It's better than even money that somebody's got to win.

Oh, sure, it's illegal to wager on a presidential race in the United States. But thanks to the Internet we now live in an age of gambling without borders, which enables Americans -- along with the rest of the global village -- to get a piece of the action.

Although precise numbers are impossible to come by, it's estimated that tens of millions of dollars already have been plunked down on the 2004 presidential election.

''Americans are rediscovering betting on presidential races," said Koleman S. Strumpf, an associate professor of economics at the University of North Carolina at Chapel Hill, who tracks gambling trends. ''It's got the potential to be like the Super Bowl."

While most polls and pundits are calling the presidential race even, gamblers are giving a slight edge to President Bush. They think Bush's chances of reelection are around 55 percent and Senator John F. Kerry's chance of preventing that at roughly 45 percent.

The recent track record of online gambling sites combined with historical data indicate that bettors who vote with their wallets and pocketbooks are usually right. The prescience is no accident, according to Mike Knesevitch, communications director for Intrade.com, which has handled more than $14 million in election action since the campaigns started.

''If you're going to trade, you'd better have done your homework or you're going to get your clock cleaned," he said. ''Public opinion polls ask you who will you vote for, but we ask a different question -- who do you think will win, and will you back that opinion with capital?"

Placing a presidential bet, though often illegal then as well, used to be as American as hanging red, white, and blue bunting at a political convention. From the 19th century to the mid-20th, odds on presidential races were greeted with much fanfare and regularly posted on the front pages of the nation's leading newspapers in the weeks preceding the election.

When it came to presidential betting, New York City was the Las Vegas of its day, taking in an estimated half of all presidential bets made in the entire country. The markets gradually evolved but by the 1880s had moved from back rooms and pool halls to major Broadway hotels and the Curb Exchange (the predecessor to the American Stock Exchange).

''Election nights were like New Year's Eve," said Paul W. Rhode, also an economic professor at UNC-Chapel Hill who has researched the history of presidential betting. ''People would congregate in downtowns and wait for the newspaper to print the latest returns, and they'd continue to bet right up until a winner was declared."

By World War II, the presidential betting market faded with the rise of antigambling laws, scientific political polling, and a burgeoning sports betting market. However, a historical examination of the 19 elections from 1868 to 1940 reveals that bettors displayed an uncanny ability to select the eventual victor.

In only one case -- the election of 1916 -- did the candidate clearly favored in the betting the month before the election end up losing, according to Rhode and Strumpf. In 1916, the betting favorite, Republican Charles Evans Hughes, lost to the incumbent, Democrat Woodrow Wilson, in a close race.

''The betting markets were astonishing; they almost never got it wrong," said Strumpf. ''It's one of the mysteries of the market. We don't know how they did it, but at the end of the day they did it."

For Americans looking for action on the presidential race, there are a couple of types of venues. The most popular are the online futures markets such as at www.intrade.com. Sites like these discourage using the term ''gambling" and prefer ''trading."

The business school at the University of Iowa runs a similar trading site called the Iowa Electronic Markets, open to the public. In fact, it's the only legal place to bet on the presidential race in the United States, since the university uses the website for research and educational purposes. (Unlike other sites, traders are limited to a maximum $500 investment.)

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