Website Allows Gamblers To Place Bets On President’s Future

Think University President Lawrence H. Summers is going to resign?

For $7, you can put your money where your mouth is.

On Tradesports.com, Internet users can bet on everything from who will win this weekend’s Daytona 500 to whether there will be U.S. or Israeli air strikes against Iran.

And now they can bet on whether or not Harvard’s embattled president will announce his resignation by June 30.

When this article went to press, the market was predicting a 70 percent chance that Summers would in fact resign.

A resident tutor in Eliot House, Alexander G. Liebman, proposed the idea on Tuesday to Tradesports.com.

“I thought it would be a good idea to give President Summers a chance to make some easy cash with insider trading,” joked Liebman.

In a departure from standard trading floors, the website does not prohibit those with insider information from participating.

Liebman, who called himself a “Tradesports junkie,” said the website agreed to offer the bet on Wednesday shortly after a story in the New York Times pushed Summers back into the national spotlight.

Tradesports.com does not actually accept bets itself, but allows people looking to bet in favor of a particular outcome to find people looking to bet against that outcome.

Users can bet that Summers is going to resign by buying a contract for $7, which was the going price when this article went to press, or that he isn’t going to resign by selling a contract. In a process called “selling short,” one can sell without already owning a contract.

If Summers resigns, everyone who has bought a contract wins $10. If Summers doesn’t resign, everyone who bought a contract instead pays the seller the difference between the contract price and $10.

The price of a contract fluctuated yesterday, with a low of $0.95 yesterday morning and a high of $8.50 last night.

An economics concentrator in Eliot House, Vikram Viswanathan ’06­ sold contracts yesterday for $3.80, $5.50, and $7.50. When the price of a contract rose to $8.50 around 9:30 p.m, he wrote in an e-mail, “I’m getting wrecked so far.”

“Tell Larry he better appreciate my financial support,” he added.

The number of trades has been low so far. There have been 345 contracts sold since the betting began on Wednesday night, compared to the thousands generated by typical professional sports games.

But students and professors who follow this kind of “outcome betting” say it can be a remarkable gauge of public opinion.

These kinds of bets “do amazingly well at getting the outcome right” in elections, said Associate Professor of Government Barry C. Burden, who studies public opinion and political methodology.

But he added, “I don’t know if they are as accurate when they come to sports or Larry Summers or anything else.”

Of course, Summers’ future will be decided by the Harvard Corporation, the University’s highest governing body, not by public opinion—but that hasn’t kept people from being interested in speculating on what Summers’ fate will be.

Visitors to Tradesports.com yesterday were greeted with a banner ad that read, “Larry Summers in Hot Water Again!?,” next to images of the Harvard insignia and of Summers’ head hovering above a boiling cauldron.

Liebman suggested that betting on Summers’ future could be popular among Harvard alumni working in New York’s financial sector who follow Tradesports.com closely.

—Staff writer Evan H. Jacobs can be reached at ehjacobs@fas.harvard.edu.