Friday, 29 May 2020

The States of Swing

As long time readers of this blog will know, I burned my fingers not once, but twice, in 2016 betting on politics, but after four years the pain has eroded at least slightly, and the next US Presidential Election is fast approaching in November.

A few days ago, Joe Biden was 2.32 to become the next President, which seemed to me to be quite generous given the polling numbers. As we learned in 2016, being ahead in the polls, and even getting almost 3 million more votes than your opponent, doesn't guarantee anything, but it seemed like the market was overly concerned about the Electoral College and perhaps Joe Biden's age. At 77, six months is perhaps a long time, but the "Winning Party" market had the Democrats at around evens which also seemed a decent value bet.
Looking at the markets today, there has been a strong move against Trump and for Biden so that both are effectively now neck-and neck at 2.15 / 2.17 respectively, while the Democrats have shortened to 1.96 / 1.97 to be the Winning Party. 

As we learned the hard way in 2016, the national polls are interesting but taken on their own can be misleading. As of May 27th, Biden leads 46% - 41% here, but of the 270 Electoral College votes required to win, counting the "Safe, Likely and Leans" for each party, the Democrats lead by 232 - 204.

In the "Popular Vote Winner", Joe Biden is currently around 1.34 with Trump at 5.2, and although there is always the possibility of an Electoral College twist again, I'm not sure it is close to being as likely as implied by the prices available.

The "toss-up" states, in order of Electoral College votes, and thus importance, are Florida (29), Pennsylvania (20), Michigan (16), North Carolina (15), Arizona (11) and Wisconsin (10). (Nebraska splits their Electoral College votes which explains why the total isn't 538).

So the key would seem to be how the polling is looking in these swing states

In Florida, polls as of yesterday have Biden leading 49% - 46%. Clearly with 29 votes, this is a must win state for the Republicans, as if they lose here, the Democrats would need just one of the other swing states to push them over the 269 votes needed. 

Pennsylvania has Biden well ahead by 49% - 41%, although the polling data here is eight days old, while Michigan and North Carolina have Biden ahead 49% - 43% and 46% - 44% respectively. Biden also leads in Arizona (47% - 43%) and Wisconsin (47% - 41%) which all means that in a fair election, anything close to evens for the winning party to be Democratic seems great value.

Of course a week is a long time in politics, and five months is even longer, but it's hard to see where Trump is going to start picking up the voters he needs to turn this deficit around. Wooing swing voters doesn't seem to be his strength. 

Having layed Trump at 1.99 and backed Biden at 2.32 I'm happy to let both bets run. The Democrats have traded as low as 1.68 in the Winning Party market, and the current prices look good value to me, but as I mentioned at the start of this post, politics can be a dangerous market and polls can be flawed, so don't go too crazy. 

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