Clinton's Win Enriches Bettors Facing 100-to-1 Odds (Update1)
By Michael Tsang and Eric Martin
Jan. 9 (Bloomberg) -- Hillary Clinton isn't the only person who won big in New Hampshire last night.
Online traders who placed a $100 bet on Clinton, the 60- year-old Democratic senator from New York, were rewarded with payoffs of as much as $10,000 after her upset victory over Barack Obama in the New Hampshire presidential primary, trading on Intrade, a Dublin-based online prediction market, indicated.
Her chances of winning in New Hampshire plummeted to a record low of 1 percent yesterday after her defeat in last week's Iowa caucuses prompted online traders to shift almost all their bets to 46-year-old Illinois Senator Obama, Intrade data showed.
Obama's chances surged to as high as 99 percent yesterday after polls indicated that he was also poised to win in New Hampshire. Clinton, who won by 3 percentage points, trailed Obama by an average of 6.3 points, according to Pollster.com, a Web site that compiles U.S. poll results.
``Certainly those long-shot bettors are looking very happy,'' said Justin Wolfers, a professor of business and public policy at the Wharton School of Business at the University of Pennsylvania. ``There was not a single pundit, poll or alternative prognosticator that got last night right.''
Before the New Hampshire vote, traders gave Clinton a 27 percent chance of gaining the party's presidential nomination. Now, Clinton has a 59 percent likelihood of becoming the Democratic nominee, while Obama's odds have fallen to 39 percent from 71 percent, according to Intrade.
Contract prices on Intrade reflect the odds of a candidate winning and are all-or-nothing wagers. A contract showing a 50 percent chance a candidate will win would cost $5 and would pay $10. If the candidate doesn't win, it would expire worthless.
``People sometimes think the prediction markets are guaranteeing results. They're not,'' John Delaney, chief executive officer at Intrade, said in a phone interview. ``They cannot predict the future with 100 percent accuracy. If they could, we would have found the ultimate money-making machine.''
Some gamblers still made money after wagering on Obama.
A day before the New Hampshire primary, Paddy Power Plc, Ireland's largest bookmaker, paid 50,000 euros ($73,300) to those betting Obama would win the Democratic nomination after saying the race was ``well and truly over.''
The company, located in Dublin, reversed itself today, installing Clinton as the favorite to become the Democratic nominee at odds of 8-15, which means a 15-euro wager would yield a profit of 8 euros. The company put Obama's odds at 11-8.
To contact the reporters on this story: Michael Tsang in New York at email@example.com ; Eric Martin in New York at firstname.lastname@example.org .
Last Updated: January 9, 2008 15:41 EST
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