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Iowa Electronic Markets

March 30th, 2004

IEM
One of the most fascinating political betting markets is the Iowa Electronic Exchange that is run by the university there as a way of studying how markets operate. To bet you buy “shares” in what you think is going to happen. These are priced at less than $1 which is what you receive if your selection wins. So if you buy Bush now at, say, 0.55 you will get a dollar for each share should he win the largest share of the vote in November. You can trade them 24 hours a day.

There is usually a huge amount of liquidity in the markets and the prices are a good indicator of informed US opinion. To compare an IEM price with a UK one you divide 1 by the IEM price. Thus an IEM quote of 0.25 would equal decimal price of 4 which equates to a standard betting shop odds of 3-1.

Quite often the Iowa prices will be much more sensitive than, say, a betting exchange in the UK and are often a good indicator of how the market is moving. If you want to become an IEM trader you can do – even if you live outside the US. But there is a danger – you bet in US dollars and the exchange rate could change. null

This is the IEM price page on the White House Race.

Compare that with the latest UK online bookie price.

At the time of posting the best UK bookie price on the Republicans is 8/13 or 1.61 and Betfair is showing 1.73. The Iowa quote is the equivalent of 10/11. But note that Iowa is on the share of the vote for Bush not who wins while the UK bookie prices are on the party.






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