Intrade market sees 18.9 pct chance Palin withdrawn

By Daniel Trotta

NEW YORK (Reuters) - The online prediction market Intrade sees a 18.9 percent chance Alaska Gov. Sarah Palin will be withdrawn as the Republican vice presidential nominee before the U.S. presidential election on November 4.

Intrade accepts trades on the probability of events such as whether there will be a recession, whether the U.S. Congress will lift the ban on offshore drilling or whether the United States or Israel will launch a military strike on Iran.

It opened the Palin betting market on Tuesday morning after a series of revelations about the Alaska governor who Sen. John McCain chose as his running mate, including that her 17-year-old unmarried daughter was pregnant.

The market opened at 3 percent that she would have to withdraw as McCain's running mate and climbed to 18.9 percent on 2,532 trades as of 6:45 p.m. EDT.

The markets are priced from zero to 100, with zero meaning investors see no chance an event will happen and 100 meaning it already has happened.

Removal of a vice presidential candidate from the ticket is very rare. The last time it happened came in 1972 when Democrat George McGovern dropped Missouri Sen. Thomas Eagleton after it was revealed he had been hospitalized three times for "nervous exhaustion" and received electric shock treatments.

Intrade Chief Executive John Delaney, based in Ireland, said he had no reservations about starting the Palin market.

"(Was it) a political decision for us? No. We list markets that are relevant to people, that people have a passionate interest in getting a greater amount of certainty about," Delaney said in a telephone interview.

He called prediction markets more accurate than public opinion polls and said Intrade forecast President George W. Bush's re-election in 2004 while correctly indicating the results in all 50 states.

The market gives Democrat U.S. Sen. Barack Obama a 61.6 percent chance of a November win, with McCain at 38.6 percent.

(Additional reporting by Andy Sullivan; Editing by David Wiessler and Jackie Frank)