We’ve been following McCain’s plummeting stock price on Intrade. But why is there a disconnect between McCain’s price on Intrade versus other betting sites like the Iowa Electronic Markets or Betfair? The price should be roughly the same across all three platforms, but it’s not, with differences of up to 10 points.
The New York Times’ Noam Cohen caught up with Intrade CEO John Delaney:
Mr. Delaney conceded there had been erratic behaviour — including spikes in the direction of Mr. McCain and away from Barack Obama “by up to 10 points.” And he said “trading that caused the unusual price movements and discrepancies was principally due to a single ‘institutional’ member on Intrade.”
…The reasons include “the possibility that the member was unable or unwilling to make the same transactions” on the Iowa markets or at Betfair. In addition, he wrote, the trader might have been using the site to “hedge its risk within a short period,” as may be “the case with a legally licensed and regulated bookmaker using Intrade to hedge risk from their own customers.”
As of this post McCain is trading for 15.1 on Intrade, 12.8 on IEM and 12.2 on Betfair. Shop around before you place your money.
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