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Is it worth a spread bet on Electoral College Votes?

October 10th, 2008

    Is now the time to try this form of betting?

With an Obama victory looking more and more certain the focus is moving away from who’ll be the next President to how many electoral college votes the two contenders will win.

An interesting way to bet on this is through the spread markets. Here you “buy and sell” electoral college votes as though they were stocks and shares and the more you are right with your forecast the more you win and the more you are wrong the more you lose.

All three main spread firms have markets running and I’ll be featuring their prices at least every other day until the election is resolved. To become President a contender has to get more than 269 electoral college votes – check with this Wikipedia page for an excellent explanation of how the system all works.

In betting terms if you bought Obama at 336 ECVs at, say, £25 a point, and he ends up with 366 then your winnings would be [The actual total won] minus [the level you bought at] multiplied by [your stake level]. So in this case you would get 30 * £25 = £750. Losses are calculated in the same way.

One other feature is that you can close down your position at any time taking your profit or restricting your loss. Thus currently I hold two contracts – a buy for Obama at 308 ECVs and a sell for McCain at 342 242. So I am amply in profit with both bets and could cash them in if I wanted. I’m staying in there.

The main difference between Spreadfair and the other two firms is that the former is a betting exchange. With the latter the firms fix the prices at regular intervals in response to market moves.

Disclosure note: PB has a relationship with SportingIndex under which commissions are paid for each account opened. This helps towards the cost of running the site. Please use the link.

Mike Smithson






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