On Sat, 2 Nov 1996 ichudov@algebra.com wrote:
| Clinton | Not currently offered by either | | Dole | 6:1 | 10:1 |
Whew! They are wide open for arbitrage! Suppose that at Ladbroke I sell an obligation to pay $6 if Dole wins (they are apparently valuing it for this much), collecting $1. At the same time, to hedge my exposure, I go to "William Hill", and purchase their obligation to pay _me_ $10 if Bob Dole wins, paying the $1 bill that I just got at Ladbroke's.
The problem is that Ladbroke won't take your offer, they don't work that way. If they wanted to insure against a Dole victory they would place some of the money they got from betters on Dole at William Hill, at 10:1, instead of taking your offer at 6:1. But probably they get too few bets on Dole to bother with insurance; they do take risks. Another way of insuring themselves would have been to offer 11/10 or something on Clinton but obviously they don't feel they have to do that. Asgaard