Mana By-Election Result Contracts Launched

New Zealand's prediction market, iPredict Ltd, will today launch three new stocks aimed at predicting the percentage of the vote the two main candidates will receive in this weekend's by-election in the Mana electorate. Trading will begin at 10.00 am NZT.

The bundle of three indexed contracts will ask traders what percentage of the vote Labour candidate Kris Fa'afoi, National candidate Hekia Parata and all other candidates combined will receive.

The Chief Executive of iPredict, Matt Burgess, said that, in recent days, there had been movement in the price of iPredict's binary contracts predicting who would win the by-election. At 8.32 am today NZT, the market was indicating that Mr Fa'afoi had an 85% probability of winning the seat.

However, neither iPredict nor any published opinion polls had provided data on what percentage of the vote each candidate would receive.

"This bundle of three indexed contracts will fill the gap left by the absence of polling - and experience suggests iPredict will provide far richer, more accurate and more timely information than any opinion poll anyway," he said.

iPredict has a 90% record of success in predicting future economic and political events.

An indexed contract for an election pays out depending on the percentage of the vote a candidate receives. That is, if a candidate wins 31.25% of the vote, those holding contracts for that candidate will receive $0.3125 per contract.

This means that the price at any given time indicates the market consensus of what percentage of the vote that candidate will receive. That is, if contracts for a candidate are trading at $0.4011, the market is forecasting that that candidate will receive 40.11% of the vote.

A trader who believes such a candidate will receive more than 40.11% of the vote will want to buy the contract. A trader who believes such a candidate will receive less than 40.11% of the vote will want to sell the contract, or take a short position on it.

The combined price of the three contracts should sum to $1 at all times.

In the 2008 General Election, Labour received 43.8% of the party vote in Mana and National 36.5%. For the candidate vote, the Labour candidate received 52.6% and the National candidate 34.7%.

iPredict is owned by Viclink, the commercial arm of Victoria University of Wellington, and operates with authorisation from the Securities Commission. Details on the company and its stocks can be found at www.ipredict.co.nz

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