Iowa vote boosts Obama, McCain on prediction market
WASHINGTON (Reuters) - Political prediction traders on Friday made Sen. Barack Obama the favorite to win the New Hampshire primary and sharply lowered the odds on him winning the overall Democratic nomination, a day after he won the first contest of the presidential election.
Traders on the Ireland-based Intrade prediction market at midday on Friday were giving Obama a 65 percent chance of winning the January 8 New Hampshire Democratic contest, with New York Sen. Hillary Clinton having a 39.7 percent chance.
The day before Obama's convincing victory in the Iowa caucus, the first in a state-by-state process to choose party candidates for the November presidential election, traders were betting Clinton had a 60 percent chance of winning in New Hampshire, versus 42.4 percent for Obama.
Clinton placed third in Iowa, narrowly edged out of second place by former North Carolina Sen. John Edwards.
Although Edwards immediately began painting the New Hampshire race as a contest between himself and Obama, his second-place Iowa finish did not impress traders, who gave him only a one-tenth percent chance of winning, down from 2.1 percent the day before the Iowa vote.
Traders on Dublin-based Intrade can buy and sell contracts based on which party they expect to win the U.S. election and which candidates they expect to win or lose the various state nominating contests.
Contracts are structured so that prices can be read as the percentage likelihood of the candidate winning the race. So traders buying and selling Obama contracts at 65 believe he has a 65 percent chance of winning.
Researchers who study political forecasting markets say their predictive power is comparable to opinion polls.
On the Republican side, former Arkansas Gov. Mike Huckabee's victory in the Iowa caucus did not boost traders' views of his chances in New Hampshire. They gave him only a 1.4 percent chance of winning the next contest, down from 2 percent before the Iowa vote.
Former Massachusetts Gov. Mitt Romney's loss to Huckabee in Iowa prompted traders to bid up Arizona Gov. John McCain in New Hampshire. They were giving McCain, who tied for third in Iowa, a 70 percent chance of victory in New Hampshire, versus a 59.9 percent chance before the Iowa results.
Traders were predicting Romney had a 22 percent chance of victory in New Hampshire, versus 36.9 percent before his second-place finish in Iowa.
Despite Clinton's third-place finish in Iowa, traders were still betting on her to win the Democratic nomination, though their view of her chances slipped from 61.5 percent before the caucus to 53.7 percent after.
Obama's chances of winning the nomination were seen as rising to 44.9 percent from 25.8 percent. Despite his second-place showing, Edwards' chances were seen as slipping from 12.4 percent before the vote to 2.3 percent after.
Romney's loss to Huckabee in Iowa lifted McCain in traders' eyes. They gave him a 32.4 percent chance of winning the Republican nomination, versus 26.3 percent before Iowa. Former New York Mayor Rudy Giuliani was viewed as the second most likely Republican candidate, given a 29.7 percent chance.
Traders were giving Romney only a 14.4 percent of capturing the nomination, versus 31 percent before Iowa. Huckabee's chances were forecast at 16.6 percent, versus 12.8 percent before Iowa.
(Editing by Stuart Grudgings)
