He said these betting markets are a great way to gauge the election, because people vote with their money, which reveals how much confidence they have in each candidate.
However, while these political betting markets offer gamblers a financial incentive to vote with their money, that doesn’t guarantee completely accurate results, he said. These markets can be manipulated by campaign supporters, for example, who choose to spend some of their money here rather than on advertisements, by voting for their preferred candidate, even if they think he will lose, simply to make his numbers look better. Mr. Rothschild warned this may be happening with the Intrade market in favor of Mr. Romney.
“We’ve seen evidence that Intrade can be manipulated downward in the direction of Romney, almost as cheap advertising for the campaign,” Mr. Rothschild explained. “There’s a chance there are investors who are intentionally moving Intrade further toward Romney than the general population trader believes.”
Mr. Rothschild said this can be seen in Mr. Romney’s numbers shooting up directly after debates before leveling off. Mr. Rothschild was careful to point out that he believes neither campaign is behind these efforts, however, it may be coming from supporters.
Betfair is a larger market, so it is more difficult to manipulate. Furthermore, Intrade is more widely recognized in the U.S. “So if you wanted to move one market, you would move Intrade,” he said. “Betfair is more obscure, so you would get less benefit from it.”
Polling numbers on all of these sites are expected to fluctuate throughout the day. The numbers in this story were updated around 7 p.m. EST on Monday.