Insider Trading on Intrade?

Intrade.com is a prediction markets website, where traders can bet on a number of things, including who will get the Democratic and Republican nominations. However, to the best of my knowledge, a person working for a campaign can trade based on insider information. Before a fundraising report beating expectations, a campaign worker could theoretically buy contracts for their candidate and profit on the ensuing spike.

Let’s take a look at an abnormal spike occurring on Intrade right now. In the last 24 hours, Rudy Giuliani has jumped from just over 28 to 32, nearly a 15% increase. The last week has been full of bad news for Giuliani, from his South Carolina chairman being indicted on drug charges to reports that he left the Iraq Study Group because the meetings conflicted with his paid speeches. There haven’t been any earth-shattering polls with huge leads for Giuliani: in fact, polls released over the last day show him trailing in Iowa, New Hampshire, and Georgia, and leading in Florida (by 6%), Ohio (8%), and Pennsylvania (14%).

Giuliani’s campaign has also stayed fairly mum on fundraising, with the speculation that he will meet or exceed his first-quarter totals. Although this may be natural volatility in the contract, I think Giuliani’s fundraising numbers will be better than expected.

Update: Yikes, Giuliani has now gone all the way up to 35, a 25% increase for the day. There has to be something good about to happen for the campaign. The last time Giuliani went up by more than 25% in one day was more than two years ago.

Update 2: Another development is McCain plunging dramatically from 8 to 4 in the last day.

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