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Is this another great arbitrage opportunity?

November 26, 2007

Why does the market give Romney a greater chance of winning New Hampshire than Iowa?

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One of the most puzzling things in the betting markets believe that Mitt Romney has a much greater chance of winning New Hampshire than of winning in Iowa. For instance, Intrade.com has him at 67-80 to win the Granite state but at only 43-49 in Iowa. Although this might be logical in a superficial way, after all he was the governor of nearby Massachusetts and he has a considerable lead in that state. However, Romney has emphasised a victory in Iowa so much that if he fails to deliver his campaign will be irreparably damaged and his lead. At the same time he faces strong challenges from both John McCain and Rudy Giuliani. Given that the former has to win this state, or face political oblivion, he can expect a vigorous campaign that won’t hesitate to tackle him head on with the issues. At the same time failure to win Iowa will mean that a resurgent Huckabee and even Fred Thompson will be snapping at Romney’s heels, siphoning off conservative votes from him.

Therefore, I predict that if Romney fails to win Iowa his chances of winning New Hampshire as well are pretty marginal. Even if Romney wins he will face an uphill struggle. This suggests both that betting against Romney in New Hampshire makes sense, but that if you are conservative you could think of betting on him winning Iowa as an arbitrage, although personally I prefer the bolder option of simply betting against him in both states.

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One comment

  1. […] post by thepoliticaltipster This was written by . Posted on Monday, November 26, 2007, at 5:28 am. Filed under […]



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