This article first appeared at Betfair Australia’s The Hub, on 11th August 2020
When last discussing the US election for The Hub and in my extensive interview with Betfair, the betting was roughly tied. I argued the odds were wrong because numerous indicators pointed towards Joe Biden. The market has since moved my way — Biden is currently $1.72 compared to $2.60 for Trump.
That implies a 58% chance for Biden, highlighting a massive difference with polling models. The Economist/Yougov rate the Democrat around 90%.
My view is that this market — set to be the biggest ever in Betfair’s history — is proving one of the least rational. The main odds open up various hedging opportunities using smaller markets.
Later in the cycle, I’ll explain how to exploit them in detail but the most obvious discrepancies involve state betting and vote share. There is no way Trump wins the electoral college without Florida. Nor with less than 46% of the vote. Yet his odds for the former are comparable to the outright odds and much bigger for the latter percentage target. If you fancy Trump, focus on those bets rather than the presidency.
Regarding vote share, consider recent elections. 2012 was very predictable – the favourite in every state won. One explanation was that partisanship already ran so deep that there were very few persuadables.
Mitt Romney – a moderate by comparison – outscored Trump’s 2016 popular vote share but lost because he couldn’t cut across America’s entrenched divide. When 98% of the electorate vote either Democrat or Republican, 47% isn’t nearly enough.
The two-party share was a mere 94%, with the defecting share coming more at the damaged Clinton’s expense. Trump lost 46/48 with a lower vote share in Romney but edged the electoral college.
WHAT DO TRUMP’S NUMBERS SAY?
Trump’s already low approval rating fell immediately after taking office and became entrenched in the low forties. Fivethirtyeight measure it at 41.4. Five years of this most ‘marmite’ of candidates monopolising the news cycle has polarised opinion about almost every political matter in a country that was already deeply polarised.
To win again in a more conventional two-horse race than 2016, he needs extra voters. There is nothing in the numbers to suggest, or logical explanation why, he suddenly wins over opponents who strongly disapprove in record numbers, consistently.
Various electoral indicators paint a similar picture. The Economist/Yougov numbers are based on a projected 9% Biden lead. Considerably higher than Clinton’s lead at an equivalent stage. On managing the Covid pandemic, Trump has an appalling -20% approval rating, even worse than -14% overall.
THE POSITIVES FOR BIDEN
Biden is well ahead in the key states, most notably the must-win Florida – a state with a large elderly, white population. That makes the Sunshine State a likelier Republican target but Trump’s stance on Covid and masks is ruining him among that essential segment of his base.
As for the parties, Republicans consistently trail Democrats by around 8% in the generic ballot – a guide to the House race that Republicans won by 1% in 2016, and in line with the ‘Blue Wave’ mid-term elections. They are trailing in key Senate races and even some traditionally safe states are competitive.
My core analysis has not changed — this will be a referendum on Trump, and a clear majority oppose. Various polls during his term have shown over 50% committed to voting against. During the impeachment process, a peak of 55% wanted him removed from office.
Of course, we must consider the counter-arguments. Events, scandals can change an election year. He still has decent economic numbers, despite the Covid disaster. Were a vaccine found, markets would soar. Plus be sure, Trump has all manner of unconventional tricks up his sleeve.