ROBERT SIEGEL, HOST:
This is ALL THINGS CONSIDERED from NPR News. I'm Robert Siegel.
MELISSA BLOCK, HOST:
And I'm Melissa Block. Have election polls got your head spinning? Mitt Romney up by 7, President Obama up by 3 and a dozen other polls with a dozen other results - well, take heart. We're going to introduce you now to a place that distills all of that data into one number that claims to predict the outcome of the election.
It's an election market and NPR's John Ydstie reports you can bet on it.
JOHN YDSTIE, BYLINE: No doubt there's a bookie or two in your city who would give you odds on the presidential race and be happy to take your bet. But for most of the nation's history, we've had another option - election betting markets. University of Kansas economics professor, Koleman Strumpf, says they've been around since early in our democracy, but were especially popular in the late 19th and early 20th centuries.
KOLEMAN STRUMPF: There was a period in the early part of the 20th century when this market literally existed right outside Wall Street.
YDSTIE: It was outdoors, right on the curb, so it became known as the curb market.
STRUMPF: People would actively bet on all sorts of elections. And for sure, particularly in the period right around now, October, right before the election, there were huge amounts of betting activity.
YDSTIE: And before the era of public opinion polling, newspapers would report on the action to get a sense of which candidate was winning.
STRUMPF: So the reporter for, say, the New York Times would go down and would report on this market and he would list not only what the prices were, to give us a sense of who was leading, but he would also list who was actually making these investments or bets.
YDSTIE: The markets were very accurate predictors, but faded from the front pages once election polling came into its own. However, they've re-emerged in recent years, in a couple of forms. One is the Iowa Electronic Market, an online small-stakes exchange where you can buy a share of Obama or Romney to win.
STRUMPF: It works kind of a lot like a stock market, except for instead of trading shares of IBM or Johnson & Johnson, you're buying shares of candidates. If you own a share of Mitt Romney and he actually gets elected president, you get a dollar in this market. If he does not get elected, your share expires worthless.
YDSTIE: Today, you could buy a share of Mitt Romney for just under 40 cents. That indicates the traders think Romney has a 40 percent chance of winning the election. Meanwhile, President Obama's odds of winning are a little over 60 percent and one of his shares costs about 60 cents. We should say here that it's technically illegal in the United States to bet on a presidential election.
However, the Commodities Futures Trading Commission has declined to rule on whether the Iowa market is legal or not. There's another larger and better-known online prediction market called Intrade. It's based in Ireland and Carl Wolfenden is its operations manager.
CARL WOLFENDEN: Yeah, we've got a good record when it comes to elections. Back in 2004, the markets correctly predicted a George W. Bush victory, as well as picking the winner of all 50 states.
YDSTIE: Wolfenden says, so far, almost 8.5 million shares, worth nearly $85 million, have been traded on Intrade's presidential election market. Americans betting on the Intrade market are in a gray area, legally, but the site certainly has American traders. Currently, Intrade's odds are about the same as the Iowa market's - 60 percent likelihood of an Obama victory and 40 percent for Romney.
Professor Strumpf says those odds are especially helpful for the average person or the water-cooler pundit, because they reflect all the election variables.
STRUMPF: You can just go to Intrade and see this number. And this number basically reflects the wisdom or the beliefs of investors who themselves are actually looking at all these polls, and lots of other information, and are processing it basically for you.
YDSTIE: So even with a recent Gallup poll telling us Governor Romney is up by 7 points, the people putting down their money are reminding us it's more complicated. It's really about swing states and the Electoral College, which they still expect President Obama to win. John Ydstie, NPR News, Washington.