I’ve been saying for ages that the distribution of electoral college votes is my ideal strategy for the closing stretch of the election and today, I’ve published my first bet.
— Political Gambler (@paulmotty) September 30, 2016
To be honest, the lack of liquidity in Betfair’s Clinton Electoral College Votes market is frustrating, although I still expect it to liven up. Otherwise, we’re stuck betting with bookmakers who are liable to restrict or ban you for being a shrewd gambler. Nevertheless, here’s my logic.
Regular readers may recall how we made money out of Brexit. The core plan, that set everything up, was backing a narrow win for Remain via the 50-55% band and hedging between handicap markets to create a ‘middle’ of 50-52.5%. That allowed a cover on Leave, that meant we were effectively laying under 55%.
I was always very confident that Remain wouldn’t go above that percentage and once it became clear on the night that it wouldn’t, covering on Leave to ensure the maximum profit was easy.
The electoral college offers a similar opportunity. We can all try and predict the exact distribution of votes by correctly predicting the result of every state, but the margin for error is obviously big.
For example, Obama won 332 votes, which seems a good benchmark to start from as it’s plausible that they all go exactly the same way. The odds taken today imply Clinton has just a 17% chance of getting between 330 and 359. I reckon that’s a big understatement and that the odds will move our way.
However it isn’t an exact prediction. Take one state away and she falls below our band. Add North Carolina’s 15 votes though, and Clinton has room for error.
Plus we know the Trump effect is not uniform, bringing other states into play. If he has a very poor result, Arizona, Georgia and Texas could dramatically alter calculations. On the other hand, Iowa looks a state he could win even on a bad night. Ohio remains a very realistic gain even if losing nationally. If he performed much better than expected, a shock in one of the North-East states cannot be totally dismissed.
So my plan is to build a book, just like Brexit, where I’ve got odds that decrease between now and polling day. My opinion remains that Clinton is on course to win well. That he is going to struggle to win any swing state. 347 – Obama states plus NC – is realistic.
If it looks set to go that way, the 360 or more band might be the right cover to have, in case AZ or one of the other upsets go for her. If closer, I’ll cover on one or more of the lower bands. Or perhaps just cover on a specific swing state or two. Watch this space for updates.