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GOP Faces a Tough Battle to Win White House

The Republicans may have started the presidential campaign thinking it would be easy to defeat Barack Obama. Money—real money—thinks the GOP has its work cut out for it.

Two political futures markets see Obama winning the election. But Democrats shouldn't get too cheerful. They may not retain the Senate and probably won't win back the House of Representatives.

According to Intrade.com, the Irish company that lets investors speculate on just about everything, including elections, Obama has a 59.7% chance of winning the election. That's down from 59.9% on Monday and 61.4% on March 12.

The Iowa Electronic Markets looks at popular votes and sees the Democrats winning 51% of the popular vote vs. 48.3% for Republicans. In a separate look at the election—the chances of winning the most votes outright—Obama has a 62% chance.

Both markets require you to put cash in to vote. Intrade won't take credit cards because the government regards speculating on political elections as gambling. Iowa gets around the problem because its sponsor, the University of Iowa's College of Business, uses the information for research purposes.

What makes both interesting is that they do come quite close to accurately predicting electoral outcomes. Intrade, for example, came closer to predicting the outcome of the Ohio Republican primary—a narrow Mitt Romney win—than nearly all pollsters.

It does give Romney a 96% chance of winning the Illinois primary and a 90.2% chance of winning the Republican nomination.

Intrade does not have a perfect track record. It wrongly predicted Romney would win the Iowa caucuses and Colorado.

Intrade has been in business since 2001 and opened its political markets in 2004. According to Bloomberg BusinessWeek, the site has been a go-to source for reporters and political junkies since the 2008 presidential race, when it predicted Obama would win 364 electoral college votes. Obama ended up with 365.

The two markets graphically show how Obama's fortunes have changed. After the death of Osama bin Laden, the Intrade saw the odds of an Obama win soar to about 70%. The budget battle and financial turmoil last summer and early fall cut the odds down to maybe 46%. But the markets began to see Obama's chances improve as the caucuses and primaries got under way.

By early February, the odds of an Obama win hit 60% and haven't changed much since.

IEM's daily market data show a similar trendline.

 


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