Political analysts are furiously debating the meaning of Monday’s Iowa caucus outcome, but according to those willing to actually put their money where their mouth is, the results are clear: Marco Rubio was the big winner of the caucuses, and Donald Trump the big loser. Ted Cruz’s chances of winning the nomination barely budged.
PredictIt is a website that offers a so-called “predictions market.” Users are able to buy “shares” in an event happening, with the price corresponding to the perceived likelihood of the event. If the event happens, each share pays out $1, and if the event fails to happen, each share becomes worthless. Shares can be resold for different prices, allowing their value to change over time as an event’s likelihood grows and shrinks. The site, then, allows people to bet on future events. For instance, if one believes Hillary Clinton is absolutely certain to win the 2016 election, then one would want to buy Clinton shares for the 2016 presidential race, which can currently go for about 44 cents as of this writing.
What does this all have to do with the Iowa caucuses? Unsurprisingly, the race for the Republican nomination is one of PredictIt’s most popular betting markets, and the share prices of individual candidates saw huge swings based on Iowa’s results. Interestingly, according to those willing to bet money on the matter, Iowa’s big winner was third-place finisher Marco Rubio, while Donald Trump was hurt badly and, oddly enough, actual winner Ted Cruz saw his chances change barely at all.
PredictIt shares for Donald Trump winning the Republican nomination were selling for 48 cents apiece Jan. 31. By the end of Feb. 1, when it became clear that Trump had lost to Cruz and was only slightly ahead of Rubio for second place, they tumbled all the way down 27 cents. They recovered slightly Tuesday morning to rest at 31 cents as of this writing, but the outcome is still clear. Cruz’s upset in Iowa has made bettors extremely skeptical of Trump’s overall chances. (RELATED: Betting Markets Show Just How Badly Jeb Got Crushed In The Last Debate)
The main beneficiary of Trump’s fall isn’t Cruz, though, but rather Rubio. Rubio nomination shares cost 31 cents Jan. 31. The price jumped substantially to 38 cents Feb. 1, and then ballooned even harder Tuesday morning, sitting at about 50 cents around the time of this writing. Cruz’s shares also saw an increase, but only from 14 cents before the primary to about 22 cents now.
Similar shifts were seen on the sports betting website Betfair, which also is running a market for the 2016 election. Over the course of Monday evening, Rubio saw a huge surge from about 30 percent to above 50 percent, while Trump dropped quickly from 50 percent to about 25 percent. Just like on PredictIt, Cruz saw a boost, but a small one.
In contrast to the volatility of the Republican race, bettors apparently found the Democratic results in Iowa unsurprising, as the share prices for Clinton and Bernie Sanders moved very little. Sanders shares for winning the Democratic nomination were 28 cents on Jan. 31, and on the night of Feb. 1 they were entirely unchanged. Tuesday has seen similarly little movement.
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