As regular readers will have noted, its been a few months since my last post. This was due to working non-stop during the US election run-in and a long overdue break once it became clear Biden had won. I wrote dozens of articles and contributed to numerous podcasts during that period for a wide variety of publications. Many will soon be uploaded to the archive for posterity.
This article first appeared on 9th November 2020 at betting.betfair.com
Biden win falls short of a landslide
Biden fell short of a landslide
A comfortable enough victory by historical standards but not a blowout. To call it a landslide, Biden would have at least needed to take Florida.
Which brings us back to the question that has dominated the political forecasting community throughout 2020 – were the betting markets too favourable to Trump? Nobody has been more patronising on the matter than Nate Silver. This from last week wasn’t his most dismissive comment by a long stretch:
Even those of us who shared Silver’s expectation of a bigger Biden victory were taken aback at how touchy the FiveThirtyEight pundit seemed. How about actually running the race before judging the predictions?
Now we have, it turns out the signals from Betfair were superior to the forecasting models. Our electoral college prediction was around 290 to Biden, compared to 350-odd among pollsters.
State favourites prove reliable once again
The favourite won in 49 out of 50 states. Only Georgia broke the trend. None of the pollsters predicted Trump would win Florida or North Carolina.
This trend isn’t out of the ordinary. In 2012, every state favourite won. In 2016, 45 out of 50 did. At the 2019 UK General Election, the favourite won in over 95% of our 650 constituency markets.
Did odds factor in volatility?
When we consider the Next President odds, I think the sceptics are vindicated again. Yes, Biden backers won. But so too will the traders who laid him at [1.5] on the night, with a view to cashing out as his price drifted. He went as high as [5.2] in-running.
Such drama seems a fundamental part of betting on US elections. The way results come in inevitably skews the betting in one direction or another, as measuring what is left to come involves a level of expertise. As explained in my trading tips piece, the big urban, Democrat-leaning cities always declare last because they have more votes to count.
I’m sure next time this volatility will be factored in and bettors will be reluctant to hold onto any short-term positions. Even I’m seriously contemplating cashing out first next time. The best plan is to have a full bank, minimal exposure and a clear head to monitor dozens of markets simultaneously. There were big-priced opportunities galore to be found.
Shy Trumper theory stands up
But more than trading motivations, the long-term betting trends for this election revealed scepticism. That Biden was a strong enough candidate, or that the polls could be trusted. Belief in the ‘Shy Trumpers’ phenomenon turned out to be justified.
Whether we give it that label, or call them ‘hard to reach’ or ‘reluctant Republicans‘, it is very hard to dispute now. Trump made this election a lot closer by energising his base like never before. For an incumbent to increase their popular vote by over eight million is quite an achievement, for which there was no conventional signal.
It was enough to defy the polls in Florida and North Carolina. But more telling is that Michigan and Wisconsin were even close, when numerous forecasts had Biden double-digits ahead.