The Signal

Romney regains commanding lead in Iowa

A few hours before the Iowa caucuses begin, Mitt Romney is just over 50 percent likely to win this first-in-the-nation primary contest, according to data from the prediction markets Betfair and Intrade. This is a strong recovery for the candidate, who was trailing both Newt Gingrich and Ron Paul for much of December. And it is only one of four major changes that have taken place in the prediction markets for Iowa in the last few days.

Since last Thursday, Paul has fallen from a high of over 50 percent likelihood of victory to just about 25 percent. Rick Santorum has pulled away from the trailing pack of candidates to become a serious contender. And most interestingly, the markets that once gave Gingrich a 60 percent chance of winning have completely written him off, along with any other candidate, contrary to the polls that still have him at about 14 percent.

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Likelihood of Iowa Caucuses_Jan 3

Sources: Betfair and Intrade

Nationally, however, there is little confidence right now in anyone other than Romney. His continued front runner-status has been vulnerable only when the anyone-but-Romney mantle has been securely in the hands of one candidate. In Iowa, Paul and Santorum are dividing that position. In the same time period, his expectation to win the entire nomination has hovered steadily around 75 percent:

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Likelihood of Republican Nomination for President_Jan 3

Sources: Betfair and Intrade

If there are any surprises tonight, however, we could see these national numbers start to change. Follow us live on The Signal starting at 9:00 PM ET as we analyze polling, prediction market, search, and Twitter data as it comes!

David Rothschild is an economist at Yahoo! Research. He has a Ph.D. in applied economics from the Wharton School of Business at the University of Pennsylvania. His dissertation is in creating aggregated forecasts from individual-level information. Follow him on Twitter @DavMicRot and email him at thesignal@yahoo-inc.com.

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