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Sunday, Nov 8, 2009
Looking to figure out whether Saddam is alive or dead? Go online and check the betting line.
Mar 20, 2003 | Bad odds for the year ahead. According to Internet bookies BETonSPORTS.com, it's 20 to 1 that terrorists will storm the U.S. embassy in Pakistan by Christmas and 10 to 1 that Osama bin Laden will be strutting around the compound in the aftermath. There's a 5 to 1 chance that by year's end the U.S. will launch a military strike against North Korea, which by then will likely have tested an ICBM (2 to 1 odds) and then a nuclear-capable missile (1.5 to 1), or launched a nuclear attack on a neighboring nation (3 to 1).
Great. Put me down for $20 on everything, and pass the cyanide pills.
BETonSPORTS, based in Costa Rica, is one of several offshore gambling sites -- illegal in the United States -- that for years have booked bets on sports and finance, crude oil and currency, Oscar nominees and celebrity trials and where the next big earthquake will hit. Now, in the "shock and awe" dawn of global American preemptive war, the e-bookies see profits in the wages of empire.
Iraq, of course, is the current mother of gambles, and in the monthslong run-up to what everyone knew was an inevitable invasion, the wagering has been continuous and heavy, the odds fluctuating in often wild arcs. At TradeSports.com, out of Dublin, Ireland, bettors have staked almost $1 million on the fate of Saddam Hussein. TradeSports CEO John Delaney tells me that Iraq-related betting, which opened on Sept. 24, is outdone only by the site's bid line on college basketball's March Madness.
TradeSports.com and BETonSPORTS function exactly like futures markets: Traders swap bets against each other, bidding up contracts to beat each other out of the profit. But what makes the bets on war more than just morbidity is that, according to academics who have studied them, these "betting markets" are phenomenally accurate predictors of not simply where markets are going, but where the world is going.
So who needs CNN for determining whether Saddam is dead or not? Just follow the betting line. There are four Saddam bets currently available at TradeSports: The basic bet is that he will be out of power -- not necessarily beheaded or charred or shot to pieces, but simply ex-president of Iraq -- by the end of March, April, May or June. The percentage-point probabilities increase vastly as spring heads into summer.
In the hour after President Bush's 10:15 EST war "declaration" Wednesday night, the Saddam-gone-by-March bet shot up nearly 10 percentage points -- the odds went from about 60 to 69 percent -- but by next morning had dropped back down to 60. In the five days since Bush traveled to the Azores to declare diplomacy dead and "the moment of truth" was upon us, Saddam "securities" have risen a total of 40 percent. An interesting ride, but not as thrilling as the one-day 14-point increase following Bush's March 6 prime-time news conference that rhetorically sealed the nail in Saddam's coffin (or the double-digit drop following the massive antiwar demonstrations worldwide on Feb. 15).
The gone-by-April bet, meanwhile, has hovered steadily in the low 90s, and in the wake of Wednesday's opening salvo, May and June rose to 95 percent. If Saddam is indeed ousted by the end of March -- 10 days from now -- a $100 bet at 60 percent odds pays $40 in profit. If the evil one manages to hold on past April Fool's Day, then you've just lost $60. So root for the home team. The Osama bin Laden contract is less certain: a 46 percent chance he's "neutralized" by June, but that number has been rising in the hours since the war on Iraq began.
CEO Delaney, a veteran of the investment industry, refers to TradeSports' bets as "contracts," which at first sounds disingenuous -- yeah, sure, a "contract," and if I blow five grand on it, henceforth this is known as a "bad contract" -- but he's got a point, principally in answer to those who would criticize "war booking" as somehow too grim, too mercenary, too much in bad taste. Balls, says Delaney.
"We'd ask everybody to consider that when the New York Stock Exchange opens this morning, they're not going to delist Boeing or Lockheed or any of the defense stocks because the war in Iraq has begun. When the petroleum exchanges open, they're not going to stop listing oil contracts. People will trade relevant contracts based on the information that's available. The Saddam contract is just another relevant contract. This is a service business. You keep using the word 'bet,' and though I'm not one to be sensitive about that, let me just make a small point: At TradeSports, you can trade financial products, like crude oil. If the Saddam Hussein contract is highly correlated with the oil contract -- which it is -- and we have traders trading oil contracts, why is one betting and the other trading?"
