Iowa futures market traders put money on Obama

NEW YORK (Reuters) - Democratic candidate Barack Obama has an 87 percent chance of winning the U.S. presidential election, an electronic market for wagering on the election showed on Tuesday.

With a week to go before American voters head to the polls, Republican candidate John McCain has just a 13 percent chance of capturing the White House, according to data posted by the Iowa Electronic Markets.

The IEM, which is run as a research tool by the University of Iowa Business School, has shown Obama's lead growing steadily in recent weeks.

On October 15, traders were giving McCain a 15 percent chance of coming out on top and Obama an 82 percent favorite. During the more than two years that this bet has been open, Obama has been ahead a vast majority of the time.

McCain has struggled in recent weeks to overcome Obama's lead in national polls.

The financial crisis has helped place public focus on Obama's perceived strength on economic issues, analysts say, while a series of debates and Obama's huge advantage in paid advertising in battleground states have also paid dividends.

Contracts on political prediction exchanges are structured so trading prices are expressed in percent terms as the likelihood of an event occurring. Traders pay to make bets in the Iowa market, making a profit if their candidate wins.

Studies have shown the predictive power of the markets is comparable to that of opinion polls.

The Reuters/C-Span/Zogby three-day national tracking poll released on Tuesday showed Obama leading McCain among likely voters by 49 percent to 45 percent, a slight dip from Obama's five-point advantage on Monday.

(Reporting by Kristina Cooke; editing by Gary Crosse)