The Senate Neither Contract on Intrade

On Intrade, you can trade three contracts for US Senate Control, the (SENATE.DEM.2010) contract, the (SENATE.REP.2010) contract and the (SENATE.NEITHER.2010) contract. The (SENATE.DEM.2010) contract is not what it seems and due to the contract language, it is not the same as Democrats keeping control of the Senate.

The three contracts state.

For expiry purposes any Senate seat held by an Independent who caucuses or votes with the Democrats will be considered Independent and NOT a Democratic seat. The same rule applies to any Independent who caucuses or votes with the Republicans.

There are currently two Independents in the Senate that caucus with the Democrats. So Democrats can maintain control of the Senate but the (SENATE.DEM.2010) contract can expire at 0% if Democrats have 48 or 49 Senators in the Senate not including the two Independents already in the Senate. If Republicans have 51 seats, the (SENATE.REP.2010) contract will expire at 100% and the other two contracts will expire at 0%.

This situation gets even more complicated with the fact that two candidates for the Senate are currently running as Independents. Sen. Lisa Murkowski in Alaska who lost the Republican primary and is running a write in campaign and Gov. Charlie Crist running on the ballot in Florida after losing the Republican primary to Marco Rubio. Rep. Mike Castle has recently stated he will not run a write in campaign in Delaware despite the fact that Nate Silver figured he had a significant chance of winning. As one poster on the Intrade forum stated, an Independent winning a Senate race increases the chance of the (SENATE.NEITHER.2010) contract expiring at 100. This is because it takes away from the 51 Republican seats needed to expire the (SENATE.REP.2010) contract at 100%.

Currently, the Democrats and Republicans are headed for 49 seats not including Independents. Republicans need two more seats to control the Senate but that does not seem very likely as the seats needed to gain a majority are getting harder and harder for them to win. For example Sen. Boxer in California seems to be pulling away from Carly Fiorina and Harry Reid continues to maintain a small lead over Sharon Angle in Nevada.

Here is a chart I made to easily interpret the US Senate Control contracts on Intrade.

Contract	Scenario Needed for 0% Expiry	Scenario Needed for 100% Expiry
SENATE.DEM.2010	Democrat* seats ≤ to 49	Democrat* seats ≥ 50
SENATE.REP.2010	Republican seats ≤ 50	Republican seats ≥ 51
SENATE.NEITHER.2010	Democrat* seats ≥ 50 or Republican seats ≥ 51	Democrat* seats ≤ to 49 and Republican seats ≤ 50

Disclosure: Currently, I have a sizable position going long on the (SENATE.NEITHER.2010) contract and going short on both the (SENATE.DEM.2010) and (SENATE.REP.2010) contracts which is the same thing but currently cheaper. For the first time today the (SENATE.NEITHER.2010) contract has traded 24.4%, higher than the (SENATE.REP.2010) contract. I have to agree with the market as I think the chance of Republicans holding 49 or 50 seats in the Senate is higher than Republicans holding 51 seats or higher.

*Not including Independents caucusing with Democrats.

Intrade Mid-Term Forecast (9/28/2010)

I meant to update yesterday but my dog cut the cord for the internet at my house. Sounds like a silly excuse but I’m not making that up, I swear. In any case, it’s probably for the better because some interesting polls have come out and the Senate might actually be within reach of the Republicans once again.

The House of Representatives

The Republicans continue to stay on track to win 45+ seats in the House of Representatives. Not as many as in 1994 but still a significant amount that would give control of the House back to Republicans. The House looks all but lost for Democrats and the question now seems to be how many seats they will lose?

The Senate

Last week, the election of Christine O’Donnell in Delaware made it look like Republicans had lost their opportunity to also take control of the Senate. However, the states West Virginia, New York, and Connecticut seem to be coming into play and all three were once thought of as safe Democratic seats. In West Virginia, two polls have even come out showing the Republican in the lead. One by PPP [(R) Raese 46% (D) Manchin 43%] and the other by Rasmussen [(R) Raese 48% (D) Manchin 46%]. Wisconsin which was once a toss up has now swung heavily in favor of Republican challenger Ron Johnson who is now trading at 78% on Intrade!

I am now tracking 11 Senate seats which I think are the most competitive. All of these races have the favorite trading at 80% or below on Intrade. These are Alaska, California, Colorado, Connecticut, Florida, Illinois, Nevada, New York (Special Election), Washington, West Virginia, and Wisconsin. Currently, I consider there to be 44 relatively safe Democratic seats and 43 relatively safe Republican seats. If Castle decides to make a write in bid for the Delaware Senate seat, I’ll consider it in play. If Democratic Meek doesn’t start making serious gains against Rubio in Florida, I’ll have to consider Florida a Safe Republican seat. 

Intrade Senate Forecast	Democrats	Republicans	Independents
Grouped	49.00	48.99	2.40
Individual	49	49	2

Intrade Mid-Term Forecast (9/20/10)

As you can imagine, Intrade’s prices have changed significantly this past week for the Senate. Christine O’Donnell has significantly hampered the Republican’s chances of taking back the Senate and a write in bid by Sen. Murkowski who was defeated in her Republican primary has now put Alaska in play as well. Traders on Intrade currently are not giving her much of a chance but I have now incorporated her chances of winning into the forecast as well.

The House of Representatives

Republicans continue to have a very good chance of taking over the House and have a better than 50% chance of gaining 45+ Seats. Only 39 are required for them to gain a majority.

Here is the price history for the Republican’s chances of taking over the House.

Here is Intrade’s House Forecast.

The Senate

I have now added Alaska to the Senate Forecast. That makes 12 states which are individually tracked to acquire the information below. Next week, unless Kentucky starts getting interesting, I’m going to take it out and regard it as a Safe Republican seat. Rand Paul has been trading above 80% for over a week now. Other states I have considered taking out include Florida, Delaware, Connecticut and West Virginia.

Number of Seats	Democrats	Republicans	Independents
Grouped	49.59	48.08	2.34
Individually	50	48	2

Intrade Senate Forecast

Intrade Mid-Term Forecast (9-13-2010)

One of the great things about Intrade is that it is not a model. It a market with buyers and sellers looking for and synthesizing information. As a result it is constantly updating and can adjust to all types of information, not just poll numbers. Every Monday, from now until the election, I will graphically show what Intrade Prediction Markets are forecasting for the 2010 Congressional Elections.

The Senate

Intrade Senate Forecast	Democrats	Republicans	Independents
Grouped	48.9	48.8	2.3
Individually	48.5	49.5	2

The grouped forecast represents the combined probability of 11 Senate Races that appear to be in play. These are California, Colorado, Connecticut, Delaware, Florida, Illinois, Kentucky, Nevada, Washington, West Virginia, and Wisconsin. The prices used are of the favorite. The probabilities are then added to the assumed number of safe Senate seats, 44 for the Democrats and 43 for the Republicans. The Individual forecast simply takes the predicted winner of each individual race and adds 1 to the number of assumed safe seats. In case of a 50%/50% tie, which we have thanks to Wisconsin (.5) will be added to both.

The House

Intrade House Forecast	Republicans	Democrats
Probability of Winning	71.0%	21.0%

As you can see, the Republicans are a huge favorite to win the House and even have a significant chance of gaining more seats than 54 which they did in the 1994 mid-term elections.