Which Prediction Market Will Best Predict the Oscars?
The Oscars are coming up, and I bet many readers are going to engage in a bit of betting on the outcome to liven up the otherwise attenuated proceedings. Let’s say you want to win against your family and friends: what do the futures markets tell you to do? I thought I’d compare Intrade [I] and Hollywood Stock Exchange [HSX] to find out.
Intrade makes it easy. The futures market currently predicts No Country for Old Men the winner of Best Picture, with a 69% probability. The Cohen Brothers will take the Director nod, at 72.5%, Daniel-Day Lewis for the Actor, at 88.6%, and Julie Christie is favored at 57.8% for best actress.
HSX is a little harder to interpret. The current price for NCfOM is $14.36, which would payout at $25.00 if the movie wins, and 0 if it loses. As I interpret the market, this works out to an estimated 57.44% chance of winning. The Cohen Brothers are favored at $13.19, a 52.8% probability. DDL is again the favorite for best actor, priced at $17.09, or 68.36%. And JC is the favorite for actress, at $12.80, or 51.2%
So the markets basically agree on the favorites, but the HSX market prices much more uncertainty. Since HSX trading is much thicker than the Oscar markets on Intrade (only a few hundred trades, though backed by real money), the spread isn’t that surprising. That said, these data recommend buying cheap underdogs in all of the award categories on the Intrade market if you want to make money, but bet the favorites on Sunday night, if you want bragging rights.