Should bookies have waited for the official result?

On Wednesday morning the big news from the 2012 White House race was that Mitt Romney had squeezed a victory in Iowa by a margin of of just eight votes. This was based on information from the state party HQ where it was being emphasised that this was not a certified result. That would come after signed returns has been received from the 1,700 precincts – a process that would take a fortnight.

This uncertainty is reflected in what the editor of the Spectator, Fraser Nelson, blogged at 7.53am GMT on Wednesday morning:-

“Instead of white smoke, Iowa is belching thick fog. Mitt Romney has won by, erm, eight votes. At least so we think, the Republicans say that it has to wait until ‘Certified Form E’ will be returned by all the Iowa counties, which will take two weeks, so this gossamer majority may well vanish..”

In spite of the lack of certainty the bookies – including Betfair – settled their markets that morning and paid out on a Romney victory. PaddyPower, in a smart PR move, announced that those who’d bet on Santorum would have their stakes refunded.

Fraser Nelson and others were right to be cautious. Within 24 hours the result was being called into question by what appears to have been a clerical mistake in a precinct in Appanoose County. Nate Silver takes up the story:-

“The dispute originated when a caucusgoer, Edward True, said in an affidavit that Mitt Romney had been recorded as receiving 22 votes in his precinct, called Washington Wells, when he had in fact received just two votes there on caucus night. Mr. True is a supporter of Representative Ron Paul.

The Des Moines Register reported on Friday that Lyle Brinegar, the chair of the Republican Party in Appanoose County, agreed with Mr. True’s account of the vote count and disputed the total listed by the state party.

A third person, Terri Haub, the precinct secretary, also agreed with Mr. True’s account, The Des Moines Register reported….”

Unfortunately the local officials in the precinct submitted a signed official return with the wrong numbers on it and the current position is that the state party is sticking with that. There’s still well over a week to go before the official announcement is made and clearly there will be a lot of argument in the meantime.

If that statement, next week, is that Santorum was the winner then we are going to see a mighty row between bookmakers and punters.

Given the uncertainty over the outcome on Wednesday morning the bookies were foolhardy to pay out before the official announcement. Iowa could cost them dear.

(DECLARATION OF FINANCIAL INTEREST – I stand to make a four figure sum if Rick Santorum is declared the winner of Tuesday’s Iowa caucuses)

Mike Smithson @MikeSmithsonOGH