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Some Guy Lost Millions On Intrade Betting Mitt Romney Would Win

In the weeks before the 2012 election, someone made a multi-million dollar bet that Mitt Romney would win:

One trader lost at least $4 million betting on former presidential candidate Mitt Romney through Intrade, possibly to make it appear he was faring better against President Barack Obama in the waning days and hours of the 2012 election than he was.

That’s what a new study by Microsoft Research’s David Rothschild and Columbia University’s Rajiv Sethi suggests. The study, published earlier this month, analyzed Intrade transaction level data over the course of the final two weeks of the election cycle.

Intrade is an online exchange where members make bets on various events, notably presidential elections, and 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. The total election cycle had 7.6 million contracts traded.

The trader bet solely on Romney and constantly sold on Obama, losing about $4 million in the process.

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.

It’s unclear if the person behind this was a true believer, or a supporter who was trying to manipulate InTrade to make Romney’s fortunes appear better than they actually were.

 

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About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May, 2010 and also writes at Below The Beltway. Follow Doug on Twitter | Facebook

Comments

  1. john personna says:

    It was Obama. A hedge.

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  2. James Pearce says:

    It’s unclear if the person behind this was a true believer, or a supporter who was trying to manipulate InTrade to make Romney’s fortunes appear better than they actually were.

    My money’s on the latter. A Romney true believer?

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  3. gVOR08 says:

    It’s unclear if the person behind this was a true believer, or a supporter who was trying to manipulate InTrade to make Romney’s fortunes appear better than they actually were.

    Neither seems an entirely rational reason for dumping four mil. Do you have the guy’s name? My uncle died recently and left me title to a bridge to Brooklyn.

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  4. And the American populous is losing trillions on the actual result.

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  5. Rafer Janders says:

    During the last election I was working with a large number of hedge fund and bank traders who were not only Romney fans, but were convinced that Romney was going to win. It is and will always be an enduring regret of my life that I didn’t set up million-dollar bets with all of them, bets that I’m fairly sure they would have taken. For all the fact that these guys knew a lot about finance and the market, they were pretty much all political naifs when compared to me and I really, really should have taken their money….

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  6. al-Ameda says:

    Finally, some actual income redistribution.

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  7. Neil Hudelson says:

    Is this why we haven’t seen Drew in awhile?

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  8. gVOR08 says:

    @Let’s Be Free: How exactly?

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  9. @Rafer Janders:

    For all the fact that these guys knew a lot about finance and the market, they were pretty much all political naifs when compared to me and I really, really should have taken their money….

    The last 10 years has shown pretty well that most of them don’t actually know anything about finance and the market either. They just have the connections to rig the game.

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  10. Rob in CT says:

    @Stormy Dragon:

    Bingo.

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  11. Franklin says:

    @Let’s Be Free: The question is, why do we respond to trolls?

    Like or Dislike: Thumb up 0 Thumb down 0

  12. Phillip says:

    @Neil Hudelson: or the Tsar?

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  13. michael reynolds says:

    I’m guessing it was our occasional comment friend, Drew. Sometimes known as Red Barchetta. He has money, and he was rather absurdly convinced Romney was going to win.

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  14. Kylopod says:

    He should have learned from his favored candidate that you only make bets of 10K.

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  15. Neil Hudelson says:

    @michael reynolds:

    He also had the small d!ck syndrome that would cause him to bet a few million while drunk in a bar, just to prove how manly he was.

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  16. rudderpedals says:

    A clever GOTV tactic with capital loss attributes. Oh heck, why not?

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  17. Ernieyeball says:

    @Rafer Janders:…It is and will always be an enduring regret of my life…

    You are not the Lone Ranger…
    I can still remember the day in the Fall of 2001 when I was staring at my new desktop computer.
    AAPL was selling for $7.75. It had dropped like Felix Baumgartner in free fall. Crashing from an historic high of $33.95 in Mar of 2000. A stunning 77%.
    “It won’t stay that low,” I said to myself. “Maybe I should break off $1000 and risk it.”
    Woulda, Shoulda, Coulda…

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  18. michael reynolds says:

    @Ernieyeball:

    This is why you should be working on that time machine, dude.

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  19. Ernieyeball says:

    @michael reynolds: Listen. I still have the 100 mile per gallon carburator my crazy uncle invented and an old Corvair. You’ve got the money. Maybe we could put something together.

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  20. Tillman says:

    @Neil Hudelson: I knew there was a voice here I’d been “missing.” You couldn’t get any better at vainglorious assholery than Drew.

    Still see him over at Glittering Eye occasionally, but the magic is gone.

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  21. OzarkHillbilly says:

    His name was Sheldon Adelson, no…. his name was David Koch…. No, his name was George Soros…

    So many stupid rich people to pick from…. What to do, what to do….

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  22. OzarkHillbilly says:

    @michael reynolds: Guys, Drew was nothing more than a fictional character dreamed up in somebodies basement by somebody who read too much Ayn Rand. Yeah he talked the talk. But so what? Hang around a few blogs and so could I. He was never able to negotiate more than a used car deal. Never mind a multi-national merger.

    My best guess is Drew has a C- avg in Business Admin and thinks that makes him…. Warren Buffet.

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  23. Hal 10000 says:

    Nate Silver speculated about this when intrade was so at variance with both the polls and other betting outfits. Seems he was right. Again.

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  24. Latino_in_Boston says:

    Man, if we could count up all the money that was lost betting on a sure thing like Romney, we’d have a good amount for a national stimulus package. Actually, now that I think about it, Romney losing WAS a stimulus package.

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  25. Moosebreath says:

    @Latino_in_Boston:

    “Actually, now that I think about it, Romney losing WAS a stimulus package.”

    Yes, but most of the money was spent on media consultants and TV advertising. Unless it trickled very far down, it wouldn’t do much to stimulate the economy.

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  26. Neil Hudelson says:

    @OzarkHillbilly:

    I don’t think many of us ever thought differently…

    I believe most comments re: Drew were in jest.

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  27. Blue Galangal says:

    Better call Saul.

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  28. Barry says:

    @john personna: “It was Obama. A hedge. ”

    OK, you win the thread.

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