The mother of all gambles

Looking to figure out whether Saddam is alive or dead? Go online and check the betting line.

Topics: Iraq war, Iraq, National security, Middle East,

The mother of all gambles

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?”

One mocking Web site that offers its own “Baghdad Bonanza” war gambling exercise obliquely asks the same question. “Blood for oil? You bet!” exhorts MarchtoWar.com, co-founded by 32-year-old Tad Hirsch, a grad student at MIT’s Media Lab. Send in $5, pick the war’s start time down to the date, hour and minute, and win 20 percent of the kitty in the form of pre-paid gasoline cards; the rest will go to humanitarian groups that hope to clean up the mess in postwar Iraq, likely the Red Cross or Save the Children.

“Why give away gasoline?” MarchtoWar asks. “Simply put, we love gas. We love big cars, we love 80-degree homes, and we love all manner of plastics. We love gas enough to rip up the Alaskan wilderness, and to send our sons and daughters halfway around the world to ‘rehabilitate’ Iraq’s oil supply. What better way to celebrate the beginning of the coming war than by burning a gallon of free gasoline?”

Launched on Feb. 25, the site was inundated with 10,000 unique hits in the first 24 hours of operation. Alas, fewer than 400 visitors actually bothered to throw a wager, bringing the pot to a measly two grand. “We wanted to do better than a bake sale,” shrugs Hirsch. “And we did — we did it by tapping into this fundamental American activity of wagering and gambling, something we all understand, something we revel in. I mean, what is the stock market? What is the futures market?” (At press time, Hirsch said the site had a winner, but he hadn’t contacted him yet.)

Political analysts have long noted how gambling odds make for better prophecy than opinion polls. Since 1988 political scientists at the University of Iowa have run a betting market on American politics, called Iowa Electronic Markets, or IEM, which regularly outperforms professional pollsters by pricing futures as the vote percentage bettors expect a candidate to take home. In the last four presidential contests, IEM’s market price odds on the eve of election were off by an average of just 1.37 percent — better than Gallup, which had error margins of between 1.5 and 2 percent.

Betting markets are simply tapping a consensus of the extremely well-informed, says Justin Wolfers, professor of political economy at Stanford Business School. Wolfers teaches a class on the economics of sports betting, and recently completed a six-week study of TradeSports’s Saddam contract. The oil correlation was particularly compelling. “On days when the probability of war — the Saddam Hussein contract — rose 10 percent, oil prices went up a dollar a barrel. That’s kind of obvious. But then we can look at the Saddam futures contract and from that map out the future prices of oil.” The immediate impact, which we’re now suffering, is a rise of $10 a barrel; by June, the impact will run about $7 a barrel. Wolfers predicts that within 18 months there will be no impact — as if there had been no war.

“The magic of John [Delaney's] data is that it is so very reliable,” Wolfers tells me. The magic behind the reliability, of course, is the expected payout and the feared loss — the 11,000 bettors at TradeSports.com play the game with the best information available; aggregated, that information is the pooled wisdom of people who’ve invested in their opinion. “John’s got a lot of very sophisticated people trading in his market, who are very smart, who work on Wall Street and in finance in London,” says Wolfers. “It’s also fair to say that these markets capture the attention of economic and political luminaries in the United States and elsewhere. We could read the New York Times every day to see what’s going to happen — but it’s going to be a biased assessment. John’s markets are unbiased because they force you to put your money where your mouth is.”

We need only surf over to the Web site of the Defense Advanced Research Projects Agency to get an idea of the excitement in government over betting markets. DARPA, the screwball-science arm of the Defense Department, has two ongoing projects “for defining and managing markets to answer specific questions of interest to the DoD,” according to the Web site. “Typically these markets will have a small number of invited participants who will bring their information together through the market mechanism. We envision markets of 15 to 20 participants addressing questions about the probabilities of specific kinds of failure within our national infrastructure.” Failures, eh? No doubt 9/11 would qualify as a fine recent example. I wonder if the DARPA smart money is on it happening again.

Christopher Ketcham is a freelance writer living near Moab, Utah. You can find more of his work at ChristopherKetcham.com.

More Related Stories

Featured Slide Shows

  • Share on Twitter
  • Share on Facebook
  • 1 of 11
  • Close
  • Fullscreen
  • Thumbnails

    Ten spectacular graphic novels from 2014

    Beautiful Darkness by Fabien Vehlmann & Kerascoët
    Kerascoët's lovely, delicate pen-and-watercolor art -- all intricate botanicals, big eyes and flowing hair -- gives this fairy story a deceptively pretty finish. You find out quickly, however, that these are the heartless and heedless fairies of folk legend, not the sentimental sprites beloved by the Victorians and Disney fans. A host of tiny hominid creatures must learn to survive in the forest after fleeing their former home -- a little girl who lies dead in the woods. The main character, Aurora, tries to organize the group into a community, but most of her cohort is too capricious, lazy and selfish to participate for long. There's no real moral to this story, which is refreshing in itself, beyond the perpetual lessons that life is hard and you have to be careful whom you trust. Never has ugly truth been given a prettier face.

    Ten spectacular graphic novels from 2014

    Climate Changed: A Personal Journey Through the Science by Philippe Squarzoni
    Squarzoni is a French cartoonist who makes nonfiction graphic novels about contemporary issues and politics. While finishing up a book about France under Jacques Chirac, he realized that when it came to environmental policy, he didn't know what he was talking about. "Climate Changed" is the result of his efforts to understand what has been happening to the planet, a striking combination of memoir and data that ruminates on a notoriously elusive, difficult and even imponderable subject. Panels of talking heads dispensing information (or Squarzoni discussing the issues with his partner) are juxtaposed with detailed and meticulous yet lyrical scenes from the author's childhood, the countryside where he takes a holiday and a visit to New York. He uses his own unreachable past as a way to grasp the imminent transformation of the Earth. The result is both enlightening and unexpectedly moving.

    Ten spectacular graphic novels from 2014

    Here by Richard McGuire
    A six-page version of this innovative work by a regular contributor to the New Yorker first appeared in RAW magazine 25 years ago. Each two-page spread depicts a single place, sometimes occupied by a corner of a room, over the course of 4 billion years. The oldest image is a blur of pink and purple gases; others depict hazmat-suited explorers from 300 years in the future. Inset images show the changing decor and inhabitants of the house throughout its existence: family photos, quarrels, kids in Halloween costumes, a woman reading a book, a cat walking across the floor. The cumulative effect is serene and ravishing, an intimation of the immensity of time and the wonder embodied in the humblest things.

    Ten spectacular graphic novels from 2014

    Kill My Mother by Jules Feiffer
    The legendary Pulitzer Prize-winning cartoonist delivers his debut graphic novel at 85, a deliriously over-the-top blend of classic movie noir and melodrama that roams from chiaroscuro Bay City to Hollywood to a USO gig in the Pacific theater of World War II. There's a burnt-out drunk of a private eye, but the story is soon commandeered by a multigenerational collection of ferocious women, including a mysterious chanteuse who never speaks, a radio comedy writer who makes a childhood friend the butt of a hit series and a ruthless dame intent on making her whiny coward of a husband into a star. There are disguises, musical numbers and plenty of gunfights, but the drawing is the main attraction. Nobody convey's bodies in motion more thrillingly than Feiffer, whether they're dancing, running or duking it out. The kid has promise.

    Ten spectacular graphic novels from 2014

    The Motherless Oven by Rob Davis
    This is a weird one, but in the nervy surreal way that word-playful novels like "A Clockwork Orange" or "Ulysses" are weird. The main character, a teenage schoolboy named Scarper Lee, lives in a world where it rains knives and people make their own parents, contraptions that can be anything from a tiny figurine stashable in a pocket to biomorphic boiler-like entities that seem to have escaped from Dr. Seuss' nightmares. Their homes are crammed with gadgets they call gods and instead of TV they watch a hulu-hoop-size wheel of repeating images that changes with the day of the week. They also know their own "death day," and Scarper's is coming up fast. Maybe that's why he runs off with the new girl at school, a real troublemaker, and the obscurely dysfunctional Castro, whose mother is a cageful of talking parakeets. A solid towline of teenage angst holds this manically inventive vision together, and proves that some graphic novels can rival the text-only kind at their own game.

    Ten spectacular graphic novels from 2014

    NOBROW 9: It's Oh So Quiet
    For each issue, the anthology magazine put out by this adventurous U.K.-based publisher of independent graphic design, illustration and comics gives 45 artists a four-color palette and a theme. In the ninth issue, the theme is silence, and the results are magnificent and full of surprises. The comics, each told in images only, range from atmospheric to trippy to jokey to melancholy to epic to creepy. But the two-page illustrations are even more powerful, even if it's not always easy to see how they pertain to the overall concept of silence. Well, except perhaps for the fact that so many of them left me utterly dumbstruck with visual delight.

    Ten spectacular graphic novels from 2014

    Over Easy by Mimi Pond
    When Pond was a broke art student in the 1970s, she took a job at a neighborhood breakfast spot in Oakland, a place with good food, splendid coffee and an endlessly entertaining crew of short-order cooks, waitresses, dishwashers and regular customers. This graphic memoir, influenced by the work of Pond's friend, Alison Bechdel, captures the funky ethos of the time, when hippies, punks and disco aficionados mingled in a Bay Area at the height of its eccentricity. The staff of the Imperial Cafe were forever swapping wisecracks and hopping in and out of each other's beds, which makes them more or less like every restaurant team in history. There's an intoxicating esprit de corps to a well-run everyday joint like the Imperial Cafe, and never has the delight in being part of it been more winningly portrayed.

    Ten spectacular graphic novels from 2014

    The Shadow Hero by Gene Luen Yang and Sonny Liew
    You don't have to be a superhero fan to be utterly charmed by Yang and Liew's revival of a little-known character created in the 1940s by the cartoonist Chu Hing. This version of the Green Turtle, however, is rich in characterization, comedy and luscious period detail from the Chinatown of "San Incendio" (a ringer for San Francisco). Hank, son of a mild-mannered grocer, would like to follow in his father's footsteps, but his restless mother (the book's best character and drawn with masterful nuance by Liew) has other ideas after her thrilling encounter with a superhero. Yang's story effortlessly folds pathos into humor without stooping to either slapstick or cheap "darkness." This is that rare tribute that far surpasses the thing it celebrates.

    Ten spectacular graphic novels from 2014

    Shoplifter by Michael Cho
    Corinna Park, former English major, works, unhappily, in a Toronto advertising agency. When the dissatisfaction of the past five years begins to oppress her, she lets off steam by pilfering magazines from a local convenience store. Cho's moody character study is as much about city life as it is about Corinna. He depicts her falling asleep in front of the TV in her condo, brooding on the subway, roaming the crowded streets after a budding romance goes awry. Like a great short story, this is a simple tale of a young woman figuring out how to get her life back, but if feels as if it contains so much of contemporary existence -- its comforts, its loneliness, its self-deceptions -- suspended in wintery amber.

    Ten spectacular graphic novels from 2014

    Through the Woods by Emily Carroll
    This collection of archetypal horror, fairy and ghost stories, all about young girls, comes lushly decked in Carroll's inky black, snowy white and blood-scarlet art. A young bride hears her predecessor's bones singing from under the floorboards, two friends make the mistake of pretending to summon the spirits of the dead, a family of orphaned siblings disappears one by one into the winter nights. Carroll's color-saturated images can be jagged, ornate and gruesome, but she also knows how to chill with absence, shadows and a single staring eye. Literary readers who cherish the work of Kelly Link or the late Angela Carter's collection, "The Bloody Chamber," will adore the violent beauty on these pages.

  • Recent Slide Shows

Comments

0 Comments

Comment Preview

Your name will appear as username ( settings | log out )

You may use these HTML tags and attributes: <a href=""> <b> <em> <strong> <i> <blockquote>