Some Guy Lost Millions On Intrade Betting Mitt Romney Would Win
In the weeks before the 2012 election, someone made a multi-million dollar bet that Mitt Romney would win:
One trader lost at least $4 million betting on former presidential candidate Mitt Romney through Intrade, possibly to make it appear he was faring better against President Barack Obama in the waning days and hours of the 2012 election than he was.
That’s what a new study by Microsoft Research’s David Rothschild and Columbia University’s Rajiv Sethi suggests. The study, published earlier this month, analyzed Intrade transaction level data over the course of the final two weeks of the election cycle.
Intrade is an online exchange where members make bets on various events, notably presidential elections, and is watched closely by political insiders to gauge the strength of a candidate. Intrade was thrust into the spotlight in 2008 when it correctly predicted the outcome of the presidential election.
Rothschild and Sethi found that a single trader accounted for one-third of all bets made on Romney during the two week period of the study, which saw about 3.5 million contracts traded. The total election cycle had 7.6 million contracts traded.
The trader bet solely on Romney and constantly sold on Obama, losing about $4 million in the process.
Those actions effectively created what the study called a “firewall” that kept prices within a defined range and made the race seem closer than it really was.
It’s unclear if the person behind this was a true believer, or a supporter who was trying to manipulate InTrade to make Romney’s fortunes appear better than they actually were.