There are two interesting price inefficiencies in the 2016 Republican primary markets. First, Betfair and PredictIt prices, which had basically converged a few weeks ago, have moved back apart. Second, while PredictIt continues to hover at too  high of price (a well known problem), all viable candidates on Betfair are selling for under $0.93.

First, one could buy Trump on PredictIt for $0.42 and sell him on Betfair for $0.47. You will not make any money doing this, because the transaction costs are way too high. But, still, information travels easily across the traders on each exchange. This happened in 2012 between Betfair and Intrade and Rajiv Sethi and I suspect it was manipulation by someone trying to buoy Romney’s price on Intrade. I do not see evidence of that in this case. It looks like the markets are simply reflected the slightly different interpretations of ther traders.

PredictWise20160403e

GOP nomination markets on Betfair and PredictIt

Second, it is a little weird that one could buy the above set of five candidates for $0.93 on Betfair. Technically, others candidates could win and account for the remaining 7-8%, but that does not seem realistic. If I had money in Betfair right now, I would buy: Trump + Cruz + Kasich + Ryan + Romney. At $0.93 that is a good deal. The PredictWise probability for Trump is 52% right now, because I am normalizing with the assumption that anyone other than these five has a negligible chance of being the nominee. But, I keep the raw data on the page, for anyone to see.