Chris F. Masse points out Smartcrowd, a blog that gathers prices from several markets as the primary component of its commentary. I’d really like to see a service that only gathers prices for related contracts from several markets in an automated fashion, but Smartcrowd’s apparently manual index on GOP control of the U.S. House is a useful start.
Masse’s summary and comment on U.S. House control contracts are contradictory:
[real-money political prediction markets predict a GOP-controlled House while play-money political prediction markets predict a Dem-controlled House.]
So the crowds at Casual Observer and Newsfutures currently favour Democrats to win the House of Representatives, while the crowds at Tradesports and WSX suggest the Republicans will retain control of the House of Reps.
But WSX is a play-money market.
Aggregation should highlight a problem with play-money markets — play money is not fungible, so one can’t arbitrage between play-money markets, effectively reducing their size. I say should because there’s a pretty big discrepancy between Betfair and Tradesports real-money prices for US. House control. I’m guessing that with more active markets price difference among real money markets would shrink. There should be mountains of evidence one way or the other for sports bets. Anyone know?
By the way, Masse’s collective blog on prediction markets isn’t really launched yet but you may as well subscribe preemptively. Same for his insider blog which has a clever tagline (“the sidebar blog of prediction markets”).
Update 20060926: Masse points out Oddschecker, which does what I want for sports bets (hopefully they’ll expand) and a paper that has some evidence for lack of arbitrage opportunities between real money exchanges. See the comments for details.
There is a definite ard opportunity between Betfair and Tradesports but the risk is that if the elections end in a 50-50 situation, the markets would be treated differently. BF’s market is on most seats so would settle it as a dead-heat where Tradesports’ market is on GOP retaining control and so would settle the markets at 100. I’m not sure how big this risk is but the size of the arb might be worth it.
Thanks for pointing to me my mistake (leaving out WSX, which is indeed play money). I corrected.
For your information, there are automatic comparators of bookmaker odds. They also take into account the probabilities generated by prediction exchanges (mainly, BetFair and Betdaq). The best known is:
Oddschecker
http://www.oddschecker.com/
As for your question, I’ll publicize it and we will all mind it.
Wait. The impossibility of arbitrage between real-money prediction markets on US politics has been discussed by many economists’ papers. The one I remember is the Prediction Markets paper:
http://bpp.wharton.upenn.edu/jwolfers/Papers/Predictionmarkets.pdf
As for sports, I have nothing in mind.
So the discrepency between Betfair and TradeSports is due to lack of volume at BetFair.
That’s the difference between the two platforms: TradeSports is all about US topics (football, baseball, basketball, US politics) and BetFair is all about UK topics (British horseracing, soccer, rugby). You’ll find low volumes on TradeSports for British stuff and you will find low volumes on BetFair for American stuff (except US stuff that is broadcast live on international TV, like the SuperBowl). So comparison between the two is only possible when you have sufficient volume in the weakest platform (for that particular topic).
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Footnote: Contrary to stock markets, futures markets float ‘proprietary’ contracts. Maybe Jason “The Brain” Ruspini could wake up from hibernation and tell us more about implications for the question that Mike posed.
Brad, good catch, I didn’t notice that difference in the contracts, though with an odd number of seats and AFAIK no non-D&R candidates with any chance of winning the chances of the difference being important is very slim.
Chris, yes Oddschecker for non-sports bets is exacly what I want. Hopefully they will expand, I was not aware of them. It looks like there aren’t big differences between exchanges excepting low probability events. Is it just me or does Oddschecker not check Tradesports?
The Wolfers and Zitzewitz paper doesn’t say real money arbitrage is impossible, they just didn’t find siginficant opportunities in a couple datasets, which is exactly what I’d expect. So my question has already been answered.
Now if play money markets allowed trading play money between players they could be linked to real money by third parties just as MMORPG economies are, permitting play money arbitrage.
Hi Mike,
When I checked OddsChecker, sometimes ago, they would include BetFair and Betdaq in many comparison charts.
They seem to do it less. I hope that sponsoring/advertising is not a factor.
OddsChecker was the most famous of all the British odds comparators. Maybe some brand-new websites are better, I should investigate further one day.
TradeSports is not included because this betting exchange is not know in the U.K., and floats only American-centric contracts. (Or maybe they don’t pay OddsChecker.)
Thanks for your other remarks,
Chris Masse
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