IEM Futures Showed Schwarzenegger Victory
October 6, 2003 | Las Vegas Review-JournalFutures players using the Iowa Electronic Markets are betting almost six-to-one that Governor Gray Davis will be recalled and about 10-to-one that Arnold Schwarzenegger will be picked to succeed him. Buyers are predicting the recall will succeed by a margin of 55 percent to 45 percent. In the last week before the election, 2,700 individuals have bought futures contracts, or wagered legally, on the election's outcome at the Iowa Electronic Markets. Interest has been small compared with other major elections, even though it may have been on a par with the average gubernatorial election, said University of Iowa finance professor Tom Rietz. The average margin of error on Iowa Electronics Markets, a nonprofit website operated by faculty at the University of Iowa Tippie College of Business, has been 3 percent since the site was founded in 1988, and is lower than many public opinion surveys' margins of error. The fundamental reason for the accuracy is that people tend to be more thoughtful when "they're putting their money where their mouths are," Rietz said.