CONTACT: GEORGE MCCRORY
100 Old Public Library
Iowa City IA 52242
(319) 384-0012; fax (319) 384-0024
Release: Nov. 17, 2000
Iowa Electronic Markets name Gore winner in futures payoff
IOWA CITY, Iowa -- The presidential election is over, at least in the Iowa
Electronic Markets (IEM). The IEM has declared Al Gore the popular vote winner
over George W. Bush.
Because the IEM follows the percentage of the national popular vote, IEM
traders don't have to fret over recounts, late absentee ballots and legal
challenges in Florida to determine the winner of its Electoral College votes.
The IEM, the University of Iowa's real-money market in which traders buy
and sell political futures, declared Al Gore the winner based on his winning
by a 200,000-vote majority of the popular election as published in the Nov.
10 Washington Post.
Following the rules laid out in the market prospectus, IEM directors liquidated
two presidential markets on Nov. 10. In the vote-share market, which pays
on the percentage of the popular vote, traders were paid .499 cents for Gore
contracts, .497 for Bush contracts, and .004 for Pat Buchanan. In the winner-take-all
market, the IEM paid $1 for Gore contracts, nothing for Bush and Buchanan
In its New York Senate winner-take-all market, the IEM paid $1 for the winning
Hillary Clinton contracts, which had been trading in the 60- to 70-cent range
for several weeks leading up to the election.
IEM directors have closed their congressional control market, but will delay
payoffs until a winner in the state of Washington's Senate race is officially
Traders who bought Gore contracts at his pre-election level of 30 cents
profited after the $1 payoff in the winner-take-all presidential market. Bush
shares had traded at about 70 cents. However, profits were slim in the vote
share market, in which the margins between the candidates were narrow, with
shares separated by only a few cents during the campaign.
While the IEM vote share market showed Bush as the winner on election eve
at .514 cents, it was only by a narrow margin -- Gore was at .469 cents and
Buchanan at .017. Prices had shifted back and forth; on Nov. 5, Gore was leading
.498 cents to .485 for Bush.
Since it started operating in 1988, the market has had an average prediction
error of 1.37 percent, including this year's race, in which the average prediction
error was 1.96 percent, according to Tom Rietz, UI associate professor of
finance and IEM co-director.
The IEM had 7,000 traders and more than $210,000 in equity. For an investment
of as little as $5 or as much as $500, trading in the markets was open to
Six faculty members at the University of Iowa Tippie College of Business
operate the markets as a research and teaching tool. See the markets online
for more information or contact Jeanine Alcocer, IEM Operations Manager at