Saturday 10 July 2010

Why is nobody running the arb?

iPredict has the chances of an Australian Labour Party victory at 80%, the Liberals at 18%.

Pollytics rounds up Australian trading data and has the Labour Party at 76%; Liberals at 24%.

I've been trading on iPredict by watching Pollytics' reported average across Aussie trading sites and using prices there to ballpark the direction of price movement on iPredict. But, I've not bothered setting up the accounts across sites to run the arbitrage play. I've an InTrade account, but their Australian site is far too thin to even think about arbitrage: a standing bid on Labour at $0.75 and a total volume across markets of less than a hundred units traded. But, there's some free money sitting there for somebody with an open BetFair, CenterBet or SportsBet account to complement their iPredict account.

Scott Bowman's honours project with me last year showed that running the arbitrage across markets on the 2008 US election would have earned positive returns even if the trader had to use credit card borrowing to fund the play. I'll consider doing that after the Aussie election's been called, but not before: the rate of return depends a whole lot on the time that the money's held up; I'm not confident enough that the election will be held in October to start running the play.

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