Ante up: Placing big money bets on who will be president

Story highlights

  • International sites take wagers on who will win the election
  • It is illegal, however, to make such bets in the U.S.
  • Obama is getting better odds than Romney right now

In the winter of 2011, Chris, a 23-year old professional poker player, was confident that his candidate, President Barack Obama, would keep control of the White House in November of 2012.

But instead of ordering a few lawn signs or volunteering to go door-to-door for the campaign, he put his money where his mouth was.

Chris, who asked that his last name not be used out of legal concerns, bet a Maryland bookie $50,000 that Obama would beat the field, at that time the entire cohort of Republicans slugging it out in the primary.

"I was very confident," said Chris, a recent graduate of George Washington University. "No outcome is certain, but this guy was offering me 50-50 and I didn't understand how I can turn this down. The president, at the very least, was a favorite."

It is illegal to vote on the election in the United States -- the Maryland Attorney General's office told CNN that instances of betting on an election are rare -- but that doesn't mean betting on an election elsewhere is rare.

Just look across the Atlantic, where most betting institutions in the United Kingdom and Ireland have odds on all things presidential.

By the numbers: Presidential predictions

International odds makers are giving the upper hand to Obama. Most UK bookmakers this week, aside from a few outliers, give Obama 1 to 4 odds (if you bet $1 and win, you get $1.25 back), while Romney is getting 11 to 4 odds (for every $4 you bet, you get $11 back).

Paddy Power, a popular Irish bookmaker, is one such company. They not only offer head-to-head betting opportunities, but they also allow bettors to wager on state-by-state winners, Electoral College numbers and even the odds that Romney and Obama will tie in the Electoral College (only 25/1 at time of publishing).

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By the way, there are also odds on who would win the 2016 presidential election. Mitt Romney is the favorite, Paul Ryan, Romney's running mate, is a close second and Secretary of State Hillary Clinton is just behind Ryan. Donald Trump, the Republican business magnate, is getting 100 to 1 odds.

Obama getting better odds
Paddy Power, like most international bookmakers, has Obama as the favorite and Romney as the underdog in Tuesday's election.

In the last few days, possibly looking to take advantage of the odds, a sizable amount of money has been coming in for Romney, according to Féilim Mac An Iomaire, a spokesperson for Paddy Power.

"It is over a million pounds sterling (about $1.6 million) at this stage," Iomaire says of the amount of money that has been bet so far. Everyday, he says, bets of over 10,000 pounds -- or about $16,000 -- have become normal.

In order to set the odds, Iomarie says a group of bookies in Ireland comb through much of the same data that American political watchers read.

"All the latest polls will be looked at. We also do a line in all the states -- so we watch the regional polls very closely," Iomarie said. "Ninety percent of it going in is what the polls are saying."

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Intrade is another popular Irish site that allows members to bet on the outcomes of non-sports-related events. Members buy "contracts" that stipulate what they are worth if whatever outcomes happens. For example, at time of publishing, buying one share of "Barack Obama to be re-elected President in 2012" would cost $6.65. By contrast, the same bets for Romney cost $3.38.

According to Intrade, Obama has a 66.3% chance of winning the election. Romney has a 33.9% chance.

Intrade has become a website the political reporters and pundits follow regularly. When Obama's chance of winning on Intrade began to slip, many Republicans took to Twitter to tout the downslide.

Like most betting sites, Intrade does not allow U.S. credit or debit cards to be used on the site -- a way to basically prohibit Americans from betting on the election.

Brit: Americans are too 'emotional'
Back at Paddy Power, Iomaire jokes that Americans may not be the best people to bet on their own election.

"I know from speaking to American friends, they tend to have a bit more of an emotional opinion about it," Iomaire said with a laugh. "When we are looking at it on our end, we are setting it very much based on polls and the money that is coming in."

The people betting, like Chris, see it differently, though.

"Given how little is known by non-political scientists about how elections are determined, almost no one has a good idea about the likelihood about one person winning or not," Chris said. When you look at election forecasting models that "rely on more economic data and less on polls, the percentage likelihood exceeds the odds that any sports book is giving."

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One blog the avid bettor reads, he says, is The Monkey Cage, a blog about political science and politics. John Sides, a contributor to the blog and a professor at George Washington University, says he never saw himself as a prognosticator. "I never thought of myself as giving a lot of sage advice that then you could make wagers on," Sides says.

But in saying that, he acknowledges that understanding the data and the historical trend of economic data can lead to "educated guessing."

"To the large extent, the inclination of academics is to look at systematic patterns in the past and derive what is going to happen in the future," Sides said. "Maybe the information is useful, but then again, that perspective opens up the risk that this time is different.

"It would be easy money if the election weren't close. But it is a very close election," he said.

Bettors like Chris remain strident, though.

"It is a market that is malformed," Chris said. "Whenever there is a malformed market and you know what you are doing, it is a reasonably good place to put your money.