Which Trader Lost a Fortune Betting on Mitt Romney?

by Burke Speaker | September 25, 2013 10:29 am

romney 300x205 Which Trader Lost a Fortune Betting on Mitt Romney?[1]A new report has found that a single trader who lost millions to an online trading site betting Mitt Romney would win the 2012 election may have also gave the appearance the race was closer than it was.

Buzzfeed today reports that in the fall of 2012, one unidentified millionaire lost “at least $4 million” on a bet that Mitt Romney would become president over Barack Obama.

The findings are from research by Microsoft’s David Rothschild and Columbia’s Rajiv Sethi, who studied trading patterns on the now-illegal[2] InTrade.com, which allowed speculators to bet on all sort of activities, including elections.

From Buzzfeed:[3]

Intrade is … watched closely by political insiders to gauge the strength of a candidate. Intrade was thrust into the spotlight in 2008 when it correctly predicted the outcome of the presidential election.

Rothschild and Sethi found that a single trader accounted for one-third of all bets made on Romney during the two week period of the study, which saw about 3.5 million contracts traded.

…Those actions effectively created what the study called a “firewall” that kept prices within a defined range and made the race seem closer than it really was.

You can read the full report here[4].

Endnotes:
  1. [Image]: http://investorplace.com/wp-content/uploads/2013/09/romney.jpg
  2. now-illegal: http://finance.yahoo.com/news/feds-charge-intrade-illegally-allowing-bets-195844342--finance.html
  3. From Buzzfeed:: http://www.buzzfeed.com/jacobfischler/trader-lost-millions-apparently-trying-to-manipulate-intrade
  4. here: http://www.buzzfeed.com/jacobfischler/trader-lost-millions-apparently-trying-to-manipulate-intrade

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