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  • By Paul Krishnamurty | Jul 21, 2020 | Opinion

    Democrats Are On Course For A Big Win - Here’s Four Ways To Cash In

    Democrats Are On Course For A Big Win - Here’s Four Ways To Cash In Analysing the range of side markets available at November’s US Election, Paul Krishnamurty predicts Biden to win big and Democrats to gain control of the Senate
    Analysing the range of side markets available at November’s US Election, Paul Krishnamurty predicts Biden to win big and Democrats to gain control of the Senate

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    Polling signals, whether at national or state level, continue to point strongly towards a landslide victory for Joe Biden. The former VP’s best available odds have shrunk to 1.62 (Betfair). As explained last time, his lead over Donald Trump is considerably larger than that enjoyed by Hillary Clinton and the dynamics are very different to 2016.

    Hundreds of different markets available  

    The Next President markets by far the most liquid but merely one among hundreds of betting opportunities. New ones emerge almost daily, whether side markets on the main event or the vast array of Congressional races.

    Also on November 3rd, there is the nationwide race for control of the House of Representatives and 435 Congressional districts, plus 33 Senate races. Going in, Democrats control the former with 235-199 seats, while Republicans lead the Senate by 53-47 seats. Betting is available on all bar the less competitive House districts.

    Whilst each of these races is a stand-alone event, voting trends are closely related to the wider political argument. The USA was already a deeply polarised country, with ever fewer persuadable swing voters, before Trump came along. Under his presidency, that polarisation has become entrenched.

    I do not, therefore, expect a dramatic change in the polls. The past week has seen Biden ahead by 15% in two A-rated polls, achieving a peak of 55%. 15% is probably an outlier - the average is 8.6% - but that is a plausible vote share.

    A consistent majority oppose Trump

    On the question of this election - a referendum on Trump - I reckon this polarised electorate splits 55-45 against. Numerous polls - including at times when he was faring better nationally - showed around this figure committed to voting against him and even, during the impeachment process, to be removed from office.

    Trump is currently polling well below 45% - only hitting that mark once in over 40 polls since mid-May, averaging 41%. I suspect there is a ‘shy Trump voter’ effect in play here but such consistency, and historically high strong disapprovals, suggests a double-digit victory is realistic for Biden. My current prediction is 54-44.

    If so, the current favourites in Betfair’s Vote Percentage markets would win - Biden is 3.2 to get 52-54.99%, Trump is 3.0 to get 43-45.99%. On value grounds, I prefer [8.0] about Biden landing in the 55.0-57.99% band. It is quite possible things get worse for Trump under the campaign spotlight.

    Democrats to benefit from higher turnout

    The Trump era has engaged and energised voters on both sides of the argument like never before. At the mid-term elections, turnout was 50%. In the two previous mid-terms, 2014 and 2010, turnout was only 40 and 36%. 

    My view is that trend helps Democrats because turnout is a historic weakness for the left, in large part because they rely upon electoral segments that are less likely to be registered - young and minority voters, for example. Lower turnout among Dem-leaning groups are the core reason that Hillary Clinton lost. 

    The much improved turnout in 2018 worked wonders for them, yielding their best result since the 1970s. They won by 8.6%, in line with polling predictions. Generic ballot polls have barely moved since - the RCP current average has them ahead by 8.5%. They lost the House to Republicans by 1% on the day of Trump’s election.

    Back Democrats to gain control of the Senate
     
    That so-called ‘Blue Wave’ did not translate into Senate gains, though, because the tranche of seats in play were disproportionately in strong Republican states. That does not apply to this year’s map and if these national trends do hold up in November, Trump will take his party down with him.

    The Democrats are now heavily odds-on to gain Senate seats in Colorado, Arizona and Maine (I rate the first two as certainties), whilst Republicans are heavy favourites to gain Alabama. Beyond these likely transfers would reduce their advantage to 51-49, all the realistic changes would favour Democrats. 

    They are also ahead in polls and slight favourites to win North Carolina. Montana, where popular Governor Steve Bullock is on the ticket, is a strong fancy at odds of 1.85 (Betfred). Iowa is a toss-up and upsets are not out of the question in Georgia, Kansas, South Carolina and Texas. Even Senate leader Mitch McConnell is not completely safe in Kentucky.

    I expect that an ultra-motivated grassroots will pour energy, resources and momentum into these Democrat campaigns. When last regaining the presidency in 2008, they won 59 Senate seats (including two aligned Independents). A repeat of that peak is unlikely because the electoral map has re-aligned since but 2.0 about restricting Republicans to fewer than 50 seats - a net gain of four - looks a solid bet.

    State targets remain a superior plan for Trump backers

    Returning to the presidency and particularly state betting markets, I must reiterate an argument laid out in May regarding the best way to back Trump? The presidency is determined by an electoral college and in this case effectively half a dozen toss-up states. To win, Biden must gain 38 electoral college votes in order to reach the target of 270.

    The Democrat is well-ahead and heavily odds-on to win Michigan (16 votes). Ditto to lesser extents Wisconsin (10), Arizona (11), Pennsylvania (20) and Florida (29). Skybet offer 6/4 about Biden winning all five and the presidency (an inevitable consequence). That appeals.

    However if you want to back Trump, or cover a Biden position, it makes better sense to spread the stake around these states. He is 2.9 for the presidency, or 3.4 for Pennsylvania (Hills), 2.75 for Wisconsin (General) and 2.5 for Florida (Betfair).

    I cannot envisage any scenario where Trump loses Florida yet wins the presidency. To lose Pennsylvania would leave only an extraordinary path to victory. Alternatively I can envisage a scenario where he wins one or both, yet loses the presidency because Biden has gained 38 votes elsewhere. 

    This is a rare example where the odds in related markets don’t compare accurately. Next time I’ll take an in-depth look at the electoral college margin betting - my favourite election market - in which there are often similar mismatch opportunities to exploit.

    Recommended bets

    Back Joe Biden to get 55-57.99% @ 8.0 (Betfair)
    Back Republicans to get fewer than 50 Senate seats @ 2.0 (Betfred)
    Back Democrats to win Montana Senate race @ 1.85 (Betfred)
    Back Joe Biden to win the Presidency plus Arizona, Michigan, Wisconsin, Florida, Pennsylvania @ 2.5 (Skybet)


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