Who will be our next president? If you want an accurate guess, don't ask the pundits. Go where people put their money where their mouths are.
Intrade.com, for example.
It's a prediction market, basically a futures market like those where people bet on the future price of oil, gold and pork bellies. But at Intrade, people bet mostly on politics.
The prices on Intrade have been highly accurate predictors of the future. On TV, political "experts" make pronouncements on what they think will happen, but crowds of bettors on sites like Intrade are right more often.
In 2004, TV experts like James Carville said John Kerry would win the presidency. In 2006, they said the Republicans would keep control of Congress.
But the crowds on Intrade bet against Kerry, and in 2006, "the bettors at Intrade collectively called every single race in the Senate right," James Surowiecki, author of "The Wisdom of Crowds", told me for last week's "20/20".
Wisdom of Crowds? When I think of crowds, I think of mobs. But, Surowiecki says, "[C]rowds of people can be incredibly intelligent. ... [I]f the crowd is big enough and diverse enough, you have access to so much more knowledge."
The first computerized political market was created at the University of Iowa. "That market outperformed polls three-quarters of the time, and its election-eve forecasts were better than any pundit's and better than any poll," says Surowiecki.
Intrade takes bets on more than politics. You can bet on global warming -- will this year be one of the five hottest on record? -- or on whether Eliot Spitzer will be indicted or on whether there will be a massive earthquake before the end of this year.
But most bets concern presidential politics. People have made lots of money predicting unlikely events, such as John McCain's comeback.
So isn't this a form of gambling, and isn't gambling illegal in America? Intrade is located in Ireland, and CEO John Delaney told me he's afraid to come to America because, "I don't look good in an orange jumpsuit."
He has reason to worry. Congressional Republicans added a provision cracking down on online gambling to a port-security bill in 2006.
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