Part of the vision behind launching Hubdub was that prediction markets could offer news consumers (i.e. most of us) a better way to cut through the news media generated noise and find out what is really happening. For example, ‘Is Obama’s lead really strengthening?’, ‘Has Labour lost in Glenrothes?’ (last week the Sunday Times talked about the Labour bounce; this week how they have SNP cruising home) and ‘How big an opening will Quantum of Solace have?’.

Originally, I thought the best solution would be to ban journalists from using the phrases ‘increasingly’ or ‘more and more’ unless they have hard data to back it up. Being in no position to enforce such a ban I realized that better solution would be allow people to create prediction markets about the news stories they are following. Hubdub now tracks over 2,000 current news stories and we’ve been looking a ways to get that market data more widely distributed.

To achieve that, we’ve started working with MidasOracle.com. MidasOracle.com aims to become a hub for prediction market journalism on the web, using forecasts from all of the top prediction markets to explain current news stories. I will be posting regularly with on MidasOracle.com with my first post on the three closest states in the US election.

Popularity: 6% [?]

Image via WikipediaAt Hubdub we like to compare or forecasts with prices from a wide range of prediction markets, bookmakers and betting exchanges. One challenge we have is that only a small subset of the 2,000 markets we have traded are also traded on other exchanges. The exchanges we tend to consult are:

Prediction markets: Intrade, NewsFutures, Inkling and Iowa Electronic Markets

UK bookmakers: Oddschecker

Betting exchanges: Betfair and BETDAQ

One market that is traded on all the exchanges is the future US president market. In general the prices in this market are fairly consistent between all the exchanges, with candidates forecasts generally within 3% of each other. However in the past 10 days we’ve noticed that while Barack Obama’s price surged with us and nearly all the other exchanges, it appeared to stick in the low 50’s with Intrade.

Between Intrade and Betfair (both real money markets) there existed a 10% difference in price which lasted for several days. This is highly unusual as normally traders arbitrage between markets bringing prices back in line. Yesterday, FiveThirtyEight published research to suggest that the Intrade markets were in fact being manipulated. As of this moment Intrade has a price of 57% for Obama compared with ~64% on Betfair (and most of the other exchanges).

Popularity: 7% [?]

I’ve been talking to a lot of people over the past couple of days about the differences between polls and a market. Of course there is a rich set of academic research showing the superiority of a liquid market over a poll. Additionally, to me it makes intuitive sense: You would never try to price a stock by polling a 100 traders.

Anyway I thought I would do a quick fun comparison between a poll and a market. We are currently running a market on who will be the most followed on Twitter by the end of June.

Cast your votes here:

Place your bets here:

what is this?

The Diggnation Army v The TWiTs: Who’ll be most followed by the end of June?

% chance over time

    Leo Laporte

    Kevin Rose

    Jason Calacanis

    Alex Albrecht

    Robert Scoble

    John C Dvorak

Get this widget

Hubdub - The News Prediction Game

Let the competition commence!

Popularity: 12% [?]

By Ryan Jacobs (Politics Category Editor)

For months we’ve watched the Democratic nomination drudgingly soldier on. Now though the light at the end of the tunnel has finally appeared. As we near the end of the nominating process lets analyze what got us to this point.

At the end of April it still seemed like the fight between Clinton and Obama was a competition. McCain although out in the GOP wilderness was building his machine and raising funds. But as April turned into May a momentous shift occurred showcased by the market chart above. Around May 6-7th the entire Who will be the next President market shifted.

Clinton’s price began a slow but steady downwards slope and this price decrease boosted Obama’s standing, leading him to break free from McCain and soar ahead. Despite fallout from Reverend Wright and other political gaffes Obama’s been able to not only maintain a lead in the markets but build on it.

Oddly, the Gallup polls show a close general election race between Obama and McCain, but the markets which are asking the same question have very different results. They show what seems to be a knockout win for Obama in November. The question is why is this happening? It’s possible that Gallup responders are tinged more by ideology and don’t just take into consideration the facts but also predict who they want to be the next President. Prediction markets users don’t predict who they hope will be the next President, there predictions are based almost solely on cold hard calculations of who will be the next President. This is because they want the large payoff from predicting correct.

So what events or event caused the sudden change in the markets? If we track this back to the primaries, 2 come to mind, the May 6th Indiana and North Carolina primaries. After these as seen through the market Obama began his quick ascension, while Clinton and McCain both faltered.

So why did McCain and Clinton both falter after Indiana and North Carolina? Well, Obama won Carolina with large margins and was able to keep Clinton’s win in Indiana small, therefore he was finally able to shut her down. With Clinton all but officially done Obama could now focus on McCain. As Obama focused on McCain it became clearer and clearer who of the two was the front runner for the Presidential election and the market adjusted for this showcased by McCain’s slow downturn and Obama’s rapid ascent.

Obama now holds a major lead in the markets and once Clinton is officially gone I’d predict Obama’s price will inflate once again. The problem is when will the downturn happen? Obama can’t fly like this forever and soon enough the GOP will begin to mercilessly attack. The election this year won’t be a blowout for Obama and soon enough the markets will adjust to this, the question is when?

what is this?

Who will be the next President of the U.S.?

% chance over time

    John McCain

    Mike Huckabee

    Ron Paul

    Ralph Nader

    Mike Bloomberg

    Hillary Clinton

    Barack Obama

    Other

Get this widget

Hubdub - The News Prediction Game

Popularity: 18% [?]

By Nigel (Chief News Junkie)

Silicon Alley Insider reports that Microsoft is willing to raise its offer for Yahoo to $32-33 per share. Yahoo’s board are reported to want a number in the high 30’s which is all very well given that Yahoo’s stock price will probably drop to the low 20’s if Microsoft walks.

Would you sleep with me for $10m? 

It is clear that Yahoo’s position is shifting from “We don’t want to be bought” to “OK, but that isn’t enough”. It is a bit like the old joke where a guy propositions a girl with the line “Would you sleep with me for $10m?”. The girl says well for one night she probably would. The guy then makes the same proposal but for $100. The girl says “What do you think I am, a prostitute!?” to which the guy replies “We’ve already established your status, I’m just trying to negotiate the price!”.

Prediction market forecasting a deal 

Anyway, Yahoo is currently trading at $27.4 per share (pre-opening) so some investors certainly think that Microsoft could walk away. However more interestingly the forecast chance of Yahoo staying independent is steadily dropping on the Hubdub prediction market. Currently Hubdub predictors are forecasting the percentage chance of Yahoo being independent at the end of 2008 as around 15%. So will it be bye bye Yahoo, hello Microhoo?

Popularity: 8% [?]

We’ve just released the great news that we’ve been selected for and are going to DEMO 2008 at the end of the month. Here is the press release. (Although, if you’ve been on the beta site you would probably have figured it out given the banner! We’re a bit rubbish at keeping secrets.) DEMO is an amazing technology product conference held in the US every year. They select about 70 companies out of around a 1,000 applicants to launch their products there. Great products like the Palm Pilot, Tivo and the Pleo have launched there. Also our friends at YuuGuu launched there last year and said they had an amazing time.

The format is that we get 6 minutes on stage to pitch our wares and then there is a pavillion session afterwards where you can do one-on-one demos. The 6 minute presentation gets posted to the web so any goof-ups will be recorded for posterity!

The team are still pinching themselves that it is really happening and are working flat out to make sure every thing goes smoothly. Additionally, to coincide with DEMO we will be taking the site into public beta on the 28th of January.

I’ll let you know how we get on.

Nigel

Popularity: 7% [?]

We’re really excited to announce that Hubdub has just passed its pre-flight checks and has now entered private beta! The craft is air-worthy but there may still be the odd rumble in the engine.

We are giving out a restricted number of invite codes. To get one, go to Hubdub.com, enter your email address and it should be with you pronto.

Nigel

Popularity: 5% [?]