This article first appeared at gamblerspick.com on 5th May 2020
Last time, I discussed the mismatch between signals emerging from polls and betting markets towards November’s US Election and the perennial debate regarding which represents a better guide. Looking deeper into the plethora of side markets, the picture complicates further. In fact, it could ultimately offer some excellent, albeit sophisticated, trading angles to exploit.
First though, we must understand how a president is elected. Rather than the popular vote – which was actually won by Hillary Clinton in 2016 by a 2.9M margin – the winner is determined by an electoral college. Each of the fifty states awards a set number of electoral college votes to the winner of their statewide election.
The total number is 538, making 270 the target for a majority and victory. Trump won 306 compared to Clinton’s 232 in 2016. Despite losing the nationwide tally, his voters were more efficiently spread throughout the key states.
The prospect of a similar scenario goes a long way to explain the betting for next president. Biden is a mere 1.44 to win the popular vote, but 2.3 to be next president on Betfair. The theory goes that the Democrat challenger could rack up votes in populous blue bankers such as California and New York, but Trump retain the strategically important swing states.
How electoral college votes are balanced
To identify these decisive states, check out the map at 270towin.com. The colour scheme (Dark/Light, Blue/Red/Grey) indicates Strong/Lean Democrat/Republican, with grey representing a toss-up state. Six states are grey, collectively awarding 101 electoral college votes and therefore holding the balance of power.
Listed in order of votes, they are Florida (29), Pennsylvania (20), Michigan (16), North Carolina (15), Arizona (11) and Wisconsin (10). Trump won all six of those states in 2016 and will need to retain the bulk of them. For example, assuming none of the other 44 states switch and Biden wins Florida, Trump would need to win all the other five.
Six months out from polling day, the picture for the incumbent is not promising. According to these latest RealClearPolitics average, Trump trails clearly in five out of six and his lead in the other, North Carolina, is miniscule.
Latest poll averages for six toss-up states
Other states could potentially be in play – Minnesota, Ohio, Iowa, Texas, Nevada – although were they to flip, it would likely reflect a landslide either way. Bookies are offering odds on these and indeed all fifty states. In the more one-sided races, Smarkets offer handicap betting on the margins. Again, the signal from Ladbrokes is grim for Trump.