Cruz and Trump’s combined odds understate their chance

It goes without saying that the political leaning of US states differs, and that results will therefore vary significantly between primaries. Yet basing betting strategy on that simple, easily attained knowledge will have yielded easy profits throughout this cycle.

For example, since primary voting began, the best time to back Donald Trump was between defeat in Iowa (fairly predictable on polling and demographic grounds), and victory in New Hampshire (entirely predictable on polling and demographic grounds). Later, Ted Cruz shortened dramatically following Super Tuesday and victory in his home state. So did John Kasich after predictably winning Ohio.

Likewise, gamblers that backed Ted Cruz or opposed Donald Trump a week or so before the Wisconsin primary will have either cashed out or be sitting on a great position. In the space of two weeks including only one race, Cruz’s chance rose from 12% to 29% on Betfair, while Trump fell from 72% to 50%.

Those marks altered to further extremes as results came in on Tuesday, with Cruz almost challenging for favouritism at one stage. As announced on Twitter immediately, I took the opportunity to cash in 50 units profit of my long-term Cruz position.

Bet update: Laid Ted Cruz 50 units @ 3 for nomination, banking 30 units min profit from l-t positions, leaving big extras in both markets

— Political Gambler (@paulmotty) April 6, 2016

Re partial cashout of Cruz positions: I don't see his odds getting much shorter in April, with likely Trump wins to come in North-East.

— Political Gambler (@paulmotty) April 6, 2016

That saver doesn’t reflect a lack of confidence in Cruz. Rather, it is a cover in recognition that the market may move against him in the short-term.

Wisconsin was huge for him – a genuine breakthrough that cemented his role as the only realistic anti-Trump option and put real pressure on the front-runner. However the Badger State’s conservative movement, energised during years of political conflict under Scott Walker, made it more fertile territory for Cruz than may have immediately seemed obvious. It is not reflective of the next set of primaries in the North-East.

April is not likely to be a productive month for Cruz, with Trump heavy favourite to win all six primaries on the 19th and 26th. Sure, there has been a swing towards Cruz in various polls, but he remains way behind in all of them. One win out of six would represent success.

That doesn’t necessarily mean he will drift significantly in the betting during April. So long as Trump is set to fall short of 1237 delegates – the latest expert view on FiveThirtyEight predicts 1182 – Cruz will be popular in the betting. He would arrive at a contested convention with a massive advantage in terms of organisation and ability to accumulate delegates.

If it goes to a second ballot, I find it hard to see any other winner. Every delegate that Cruz and Kasich can deny Trump during April makes that second ballot likelier. In Betfair’s Brokered Convention market –  regarding whether all candidates will fall short of a majority on the first ballot – ‘No’ is only rated around 44%.

Nevertheless, unless he implodes, Trump is much more likely to shorten in the betting throughout April, following those wins. At the end of the month, that conversation about 1237 will still be very much alive, and the narrative will have moved on from his terrible week in Wisconsin.

Between them, Cruz and Trump take out around 79% of the book. As it has for weeks, that seems way too low. John Kasich has no meaningful route to the nomination. Paul Ryan remains an exciting position to hold and plausible outsider, but a longshot nonetheless.

Think ahead to Cleveland. If Trump and Cruz are holding 80% of the delegates and the only two names on the ballot, having blocked changes to Rule 40, what will their combined odds amount to? I say 90% plus.