US Midterm Elections: Political Betting Preview

Paul Krishmarty, aka The Political Gambler, is back to preview the US Midterm Elections. Political betting is growing enormously on the Betfair Exchange, and we’re thrilled to get an expert preview from Paul. His polarising Trump predictions upset (and championed) several customers but we love collaborating with people who have a researched opinion.


US Midterm Odds

Next Tuesday, two years since his election shocked betting markets, Donald Trump will face the first meaningful electoral test of his presidency. Although his name is not on the ballot for local races across the country, the president’s omnipresence has come to define all US political matters. Whatever the result, it will be presented as a verdict on Trump.

Control of both Houses of Congress are on the line. All 435 districts for the House of Representatives are up for election, meaning Democrats need to gain 25 seats to win control and are currently rated favourites to do so.

With only 35 of 100 seats up for re-election, however, the battle for the Senate is very different. Republicans currently lead 51-47 – discounting two Dem-leaning Independents – and are rated likelier to gain rather than lose seats. Among their defences, only Nevada was carried by Hillary Clinton in 2016, whereas Democrats must defend ten states won by Trump.

Regarding the latter, it is essential to note the rules in Betfair’s Senate Majority market. Here, a majority is defined as 51 seats, so the Democrats must gain four even though 49 would give them effective control, given the help of those two Independent Senators.

The implications of these elections, widely billed on the Left as the most important mid-terms ever, are profound. If Democrats do land the odds and take the House, they will use the power of subpoena to try to expose multiple layers of GOP (Republican Party) corruption. They could potentially empower numerous investigations against Trump and release information currently suppressed by GOP-led committees. Moreover, a good majority will give them the numbers to introduce impeachment charges.


The Consensus

The fundamental difference in dynamics between the House and Senate battles cannot be overstated. First, let’s deal with the House.

I’ve consistently recommended backing the Democrats for this target since last December and have tripled down at an average of ($1.81) for a total of 100 units.


Midterm Form Guide

It is important to emphasise the nature of a mid-term vote. At this stage of the cycle, the opposition party can be expected to be angry and ultra-motivated, for races where typically only around 40% vote. Mid-term also offers sceptical supporters of the governing party a low-risk means of registering a protest.

No wonder, therefore, that the sitting president’s party has only won these House mid-terms once since the 1970s. The exception, George W Bush’s Republicans in 2002, came in an exceptional environment following 9/11.

All the evidence since Trump’s election points towards a ‘blue wave’. They lead by an average 8% on the generic ballot. The same national figure when they last won the House in 2006 and suggesting a significant swing since recent contests. They lost the 2014 and 2010 mid-terms, when Republicans were the angry party and Obama was president, by 6 and 7%. On a more even general election turnout in 2012 and 2016, the parties were only separated by 1%.

Ever since 2016, Democrats have been flipping state legislature seats and special elections, sometimes in deep-red territory, fueled by a big rise in engagement and turnout amongst key groups. Whilst Clinton was ultimately destroyed by her failure to inspire enough millennials and minorities to vote, or flip the required number of college educated white women, these groups are now more motivated than ever.


Vulnerable Seats

If that extra enthusiasm materialises, the Democrats will sweep suburban, metropolitan House districts and outperform poll estimates. Trump will, however, be spared from total disaster by the Senate, which involves a very different set of state electorates.

Having analysed ten races, the five most vulnerable seats held by each party, it is hard to see any way the Democrats can gain the four seats required to land a majority on Betfair’s market. To merely gain two would require at least one big-odds upset plus a clean sweep of ‘toss-ups’.

Alternatively, there are a few routes to denying the Republicans an official majority, currently priced at 1.30. That requires a net gain of one. If the current favourite in each state wins, they would be down two but the races in Nevada, Arizona and Missouri are still highly competitive. Although the polls and perceived wisdom point to Ted Cruz keeping Texas red, the particulars of that race make Beto O’Rourke a plausible outside bet at $5.


Betting Opportunities

Here’s how I’m playing the Senate. First, an earlier position on No Majority at 4.2 has moved in the wrong direction and in truth, is not one to get excited about. The plan remains to try and trade out of this on the night as results emerge – if necessary by hedging against individual states. It may be, for instance, that a GOP majority becomes reliant on one state, offering a cover.

For the individual states, I’m holding four positions, listed in order of stake. I’ve backed the Democrats to win Nevada at an average of $2.10 and Florida at $1.80. Polls in the former have consistently understated Democrats in previous elections, partly due to a rising Hispanic vote. Florida appears, in both Senate and Governors races, to be edging blue.

The best Republican bet is Indiana at $2.30. This is a pro-Trump state and home of VP Mike Pence. The Democrats hold it but Joe Donnelly’s lead in the polls is built on a share well below 50% and if the third, right-leaning libertarian candidate fades, Mike Braun of the GOP will likely move up.

Although I suspect O’Rourke will find defying Texan political gravity impossible, I haven’t given up on an earlier small stakes bet at $3.20 (now $5). The scope for increased blue turnout, especially among Hispanics, is vast. The Spanish-speaking Congressman has run a remarkable campaign, out-raising and out-spending Cruz, who has a likeability problem. Three major newspapers have endorsed the Democrat.

Finally, remember the in-play markets on US elections are like no other.  Live feeds of results, arriving county by county in every state are available, with all constantly monitored and analysed on all the main US networks. Liquidity across the range of related markets is assured. The definition of political betting heaven!


Betting Strategy

 BACK – Democrat majority in the House Of Representatives.

 BACK – Democrat (Jacky Rosen) to win the Nevada Senate Midterm.

 BACK – Democrat (Bill Nelson) to win the Florida Senate Midterm.

 BACK – Republican (Mike Braun) to win the Indiana Senate Midterm.

 BACK – Democrat (Beto O’Rourke) to win the Texas Senate Midterm.


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