Monday, December 5, 2011

Intrade Odds: Newt Gingrich Narrows the Gap

It has been barely a week since we last looked at the Intrade market on the 2012 Republican nomination, but much has changed. The influence of the recent poll numbers with Newt Gingrich in the lead can be seen clearly now. Mitt Romney is still leading on the Intrade market, but it's much closer than before.

Romney has 46.0%, while Gingrich is at 31.1%. No other candidate is in the double-digits, making this effectively a two-man race--just as we saw with Rick Perry and Romney back in September. The gap between Romney and Gingrich shrank dramatically in the last week. When we last checked, Romney was ahead by 36 points. Now he's ahead by just 15 points. Over half of the lead was lost. This is the first time Romney has dipped below 50% since he began dominating Perry at the end of September.

Of the minor candidates, Ron Paul is at 6.4% and Jon Huntsman is at 8.0%. No other candidate has broken the 5% mark. Huntsman's odds presumably rose as a result of a perceived improvement in his last debate, but is otherwise inexplicable: Huntsman currently fails to get even third place in a single poll--even in New Hampshire, the only state where he's running.

The Intrade markets for individual state contests has also changed markedly. Gingrich is now the clear favorite in Iowa, with 58.3% to Romney's 14.6%. Exuberant Paul investors have given him 21.0%, which puts him in second. In New Hampshire, Romney continues to dominate at 70%. Similarly, Gingrich now dominates in South Carolina at 68% to Romney's 22%.

There's been a shift in the Florida market, where Gingrich now leads Romney 60% to 35%. But if one were to take the state markets at face value, Gingrich should be the overall frontrunner to win, rather than Romney. On the other hand, Intrade investors may foresee a drawn-out campaign where Romney's superior infrastructure trumps Gingrich's wins in the early states.