The 2016 effect continues to loom large over all political matters, including betting. Before Brexit and Trump, political betting was arguably the most reliable indicator of election results. In the first 15 years of Betfair, the favourite from 100 days out won every major UK or US election. Then suddenly, politics became extremely unpredictable.
Bettors increasingly reject US prediction models
Those markets were driven by a number of things but primarily polls and forecasting models. The ratings on Fivethirtyeight were particularly influential. Whenever their assessment moved during the last US election, so did the market. Notably, although they shared the consensus view that Clinton would win, their percentage rating was generally lower than Betfair.
Today, ahead of the first major US election since Trump took office, favourite backers seem more nervous than ever and the comprehensive state-by-state analysis of that prediction model or highly regarded alternatives such as Cook Political Report or Sabato’s Crystal Ball have made little or no impact on markets.
Democrats look overpriced for House majority
Consider the battle for the House of Representatives. Fivethirtyeight have been very strong about a Democrat majority since unveiling their model and have become more so over time, currently rating it 86% likely. By contrast, Betfair odds of 1.6 imply a mere 62% chance and have at no stage bettered 71%.
Last night, even an eye-popping 17% national advantage on the generic ballot in the latest LA Times survey failed to move the odds. Granted, that has every appearance of an outlier when considered alongside the 6% difference recorded by Yougov, but the LA Times poll involved a much bigger sample, just shy of 4,000.