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Iowa Caucus mess disrupting unique ‘betting’ market

How is PredictIt handling the chaos of the count in Iowa?

Democratic presidential candidate Sen. Elizabeth Warren (D-MA) addresses her supporters during a caucus night rally at the Forte Banquet and Conference Center February 03, 2020 in Des Moines, Iowa. Iowa is the first contest in the 2020 presidential nominating process with the candidates then moving on to New Hampshire. Photo by Chip Somodevilla/Getty Images

The chaos in Iowa due to a disaster of a count isn’t just affecting the campaigns and the Iowa Democractic Party. It’s also been really good for business at PredictIt, a site that allows a limited, exempted form of betting on elections in the United States to help academics and think tanks gather data about markets.

And there’s plenty of data to gather, as business has been brisk since caucus morning yesterday.

“It’s been really exciting,” said Brandi Travis, spokesperson for PredictIt. “We usually have about 1,800-2,500 trades a day. But there were 7,500 active traders yesterday alone for the biggest day this year.” About 500,000 shares were traded on the site by 5 a.m. yesterday, with markets for the Iowa winner still actively trading as we write this before the results are released.

But the chaos does make for some choices as to how markets will be decided. Predictions such as “Iowa caucus margin of victory” (25% right now on 1%-2%) and others might be in flux due to the controversial results. There are 4.3 million shares right now just in markets relating to the Iowa caucuses.

“As soon as we get the information, we’ll start making some decisions,” says Travis. “Right now the market is still open and people are still trading.” The Iowa Democratic Party says they’ll have numbers released by 5 p.m. today, but of course they’ve missed deadlines before.

As of right now, the markets have Bernie Sanders as the winner, but a bit more than 30% are still riding with Pete Buttigieg as well, who declared victory in a speech late last night. One of the losers appears to be Joe Biden, who is only trading at $.01 today for an Iowa victory. “This has impacted him in different markets, including the one for the nomination,” says Travis.

US betting regulations do not allow betting on elections, but PredictIt is exempted by the Commodity Futures Trading Commission because of the academic research they make publicly available to about 100 universities and think tanks across America. No one can bet more than $850 on any position in a market, meaning the stakes are somewhat subdued, but still enough where investors will take in all information to take the right position.

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