Movement on InTrade Betting Exchange

As I've written about in the past on this website, InTrade (Previously Tradesports) is a betting exchange that estimates probabilities of different outcomes based on the collective wisdom of its gamblers. This method has repeatedly been found to offer more realistic predictions about election outcomes than opinion polls.

For the last month, the market for the winner of the Democratic Nomination has been fairly static, with Hillary Clinton at around 50%, Barack Obama at 30%, Al Gore at 10% and John Edwards at 6-7%. However, over the last 12 hours, the market has been moving rapidly in Obama's favor.

As of 3:48pm EST, the last bet made on Hillary Clinton indicated that she had about 42.6% chance of being the nominee. This is down by 3 percentage points only since yesterday. Moreover, no one is currently willing to bet that she has more than a 39.3% chance of winning.  Barack Obama has been moving by an equal and opposite amount - the last transaction indicates that he has a 37% probability of being the nominee.

Perhaps more significantly, big players are currently willing to place very large bets against Hillary - in the order of $10 000.

Gamblers are currently scratching their heads at the Intrade forums, wondering what the cause of this "Hillary selling frenzy" may be. Is it a delayed reaction to the news of the Q2 fundraising? Is there a player who has inside knowledge of an impending scandal? Or is someone trying to manipulate the markets?

Unless this turns out to be a result of manipulation from someone sympathetic to the Obama campaign (in which case estimates will quickly recover to previous levels), it now appears that Barack is within striking distance, and could take over the front-runner status at short notice. If the media picks up such a story, this could be a big hit for the Clinton campaign, whose "inevitability" message would be forever buried, making the wisdom of the market something of a self-fulfilling prophecy