Betting on a New Pope
John Tierney argues that speculators at Intrade may give us the best insights as to who will be the next Pope.
If you listened to journalists during last year’s presidential campaign, you heard about a tight race with oscillating polls and shifting momentum. The weekend before the election, we painstakingly analyzed the battleground states and bravely proclaimed them too close to call. But if you watched the Intrade market throughout the campaign, you saw the traders serenely betting on a Bush victory. Most remarkably, the weekend before the election, the traders correctly called the winner in every one of the 50 states.
For now, the Intrade speculators are expecting the white smoke to signal an Italian pope. The futures contract that pays off in the event any Italian wins was trading at one point yesterday at 41.9, which means the traders gave Italy a 41.9 percent chance, followed by Nigeria at 13. The individual favorite was Dionigi Tettamanzi of Milan, at 23, followed by Francis Arinze of Nigeria, at 14.
Many of the traders probably know little about Vatican politics and are basically recreational gamblers, perhaps sentimentally betting on their local contender. But these amateurs serve a purpose in the ruthless ecosystem of the market. They are the sheep who attract the wolves. The amateurs’ money entices serious investors to spend time scouring cardinals’ past statements and other sources. The sheep’s money also offers a temptation for those with inside knowledge to cash in, even though that’s against the rules of Intrade – not to mention a 1591 papal bull forbidding Catholics from betting on a conclave.
But suppose a venal Vatican bureaucrat, or a secular friend of some official, hears a piece of useful gossip before or even during the conclave. Is he going to give it free of charge to a journalist, knowing this risks compromising himself as well as his source? Or is he is going to sit down, in the secure privacy of his home, and make a few profitable clicks on his computer?
My guess is neither. But I agree with Tierney that watching Intrade is at least as likely to give insights as listening to talking heads on television. Of course, reading Rob Tagorda’s background summaries on the papabile wouldn’t hurt, either.
Update: Dale Franks looks at Tradesports betting on the next pope.