- The 2020 Presidential election is breaking records for betting handle all over the world.
- Polling suggests that Joe Biden is firmly in control but betting odds suggest otherwise.
- Even against the unprecedented backdrop of the COVID-19 pandemic there are many parallels to the 2016 Presidential race.
Even novice sports betting enthusiasts know that the Super Bowl is the biggest single day betting event at North American sportsbooks and the Champions League Finals at books with a European clientele. Most also know that the first weekend of the NCAA basketball playoffs aka ‘March Madness’ brings in more money than the Super Bowl but over a four day period. Incredibly, none of these events come close to political betting and more specifically the 2020 US Presidential Election. Not only will the denouement of Joe Biden vs. Donald Trump be the biggest betting event of 2020 it is expected to be the biggest event in history!
If you’ve read our previous coverage of presidential politics during 2020 you’ll remember that I’ve frequently mentioned that many of the dynamics of the Trump vs. Biden race are eerily similar to those we experienced in the 2016 election. In 2016, we noticed that the implied probability of the betting odds on Trump v. Hillary didn’t correlate with the polling data. The polls suggested that the Presidential election was a Hillary Clinton landslide in the making but the betting odds indicated a much tighter race–and even one that Trump could win. Knowing what we know about the predictive ability of markets we didn’t take the bait and conclude that it was a fait accompli for Mrs. Clinton. Many extremely sharp bettors in our network did even better than that–they took big positions on Donald Trump as a huge underdog and enjoyed a massive payday.
In 2016, the Democrats nominated one of the most loathsome human beings on the planet in Hillary Clinton. In 2020, Joe Biden might be personally more likable but otherwise isn’t particularly electable. In both Presidential races the Democrats never really stood for anything, nor did they make a compelling case for why they should be elected. They gave off the vibe that it was self evident, that obviously you had to vote for them since they weren’t Donald Trump. The hatred of Trump energizes their ‘tribe’ but shouldn’t be mistaken for enthusiasm for the Democratic candidates. They just can’t admit that–like it or not–Trump resonates with a lot of voters who have much more enthusiasm about him than his political opponents have for Biden.
In all fairness, Trump’s base of support is tough to define as they defy classic political conventions. Hillary Clinton set the tone during her campaign (remember her ‘basket of deplorables’ comment?) and the Democrats have played some variation of that card ever since. Their inability to even wrap their head around the existence of Trump makes it impossible for them to understand his supporters. Instead, they’ve tried to rationalize Clinton’s loss away with one flimsy, far fetched excuse after another alternately blaming polling, the vast right wing conspiracy, Wikileaks, the Russians, the Chinese, etc.
SO WHY HAS BETTING ON THE 2020 PRESIDENTIAL ELECTION BECOME SO HUGE?
The difficulty in defining Trump’s support base also makes it difficult to ascertain what exactly is driving betting on the 2020 Presidential race. Making it all the more interesting–much of the betting action on Trump v. Biden is coming from Europe. Political betting has been popular in many parts of Europe–particularly the UK–for decades. Even so, US Presidential races were never big betting events until 2016. Donald Trump might be the ‘Beatles on the Ed Sullivan Show’ for political betting. His presence in the race took it to another level, or it least that’s the way it looks at first glance. An alternate scenario might be that a variety of external factors are driving it and Trump’s presence provides the easiest explanation.
That’s what Betfair election expert Paul Krishnamurty attributed it to in an interview with the Las Vegas Review-Journal:
“It’s all about him. Outside of America, Joe Biden is known at one-hundredth of the scale as Trump. Trump drives interest in betting. The amount bet has risen six-fold after he came into politics.”
This observation is definitely true but it still doesn’t answer the ‘correlation versus causation’ conundrum. The Trump/Clinton race in 2016 did big business as well but certainly the former first lady and secretary of state didn’t have a problem with name awareness.
BetOnline.ag is also seeing massive action on the 2020 Presidential race and most of the money is coming in on the incumbent. Since Monday, 85% of the Presidential bets have come in on Trump to the point that BOL stands to lose in the low seven figures should he be re-elected. By election day, it might be the biggest decision in BetOnline’s 20 years in the business. They’re seeing enough action that political betting markets have already surpassed the betting handle for Super Bowl LIV. To put in numerically, BetOnline has booked bets in the mid eight figure range. Dave Mason is the brand manager at BOL:
“Political stances aside, we’re all rooting for the favorite next week. That’s uncommon in our industry, but we need Biden in a big way.”
There are a number of websites that aggregate odds and betting patterns for European sportsbooks. The action they’re seeing isn’t quite as one-sided as at BetOnline but the major sportsbooks in Europe–primarily in England–are seeing between 57% and 60% of the bets on Trump. Only 28% of the bets are on Biden with the rest of the action on big longshots like Mike Pence or Kanye West.
CAN TRUMP WIN AGAIN DESPITE ALL THE POLLING SHOWING A BIG LEAD FOR BIDEN?
Definitely. Let’s start with a little bit of sports betting math. At BetOnline.ag Biden is a -180 favorite with takeback on Trump at +160. At -180 the implied probability is 64.3% and at +160 38.5%. Popular political polling website FiveThirtyEight gives Biden an 89% chance of winning to 11% for Trump. RealClearPolitics doesn’t make the same call so emphatically but their average polling data gives Biden a +7.4% edge.
So why the disparity? For one thing, polling is becoming more difficult above and beyond the difficulty in modeling Trump’s base of support. The same technologies that allow you to ditch telemarketers and collection agencies makes telephone polling that much more difficult. There’s always been a degree of ‘self selection’ in polling–meaning that often people that respond to pollsters have a political agenda for doing so. That has only grown as technology has made it more difficult to come up with an accurate sample. Above all else, however, the difficulty in defining Trump’s support base can’t be overestimated. The Republicans couldn’t figure it out in the 2016 Primary. The Democrats didn’t figure it out in the general election. The media didn’t figure it out either. That hasn’t changed.
The most significant difference between polling data and betting markets should be obvious–betting markets require you to put ‘skin in the game’. So why is so much of the betting action coming in on Trump? It could be ‘name recognition’ or the fact he’s the underdog but those explanations are too easy. With sportsbooks holding eight figure balances on Trump v. Biden you can’t just dismiss betting patterns so easily. From a line value perspective, Trump is definitely the ‘value side’.
The flip side is also worth considering–if Biden really is an 89% choice to win the presidency why don’t the betting numbers reflect that? At 89% probability the ‘true odds’ in moneyline form would be approximately -810. If the polling is even remotely accurate laying the -180 with Biden would be a very strong overlay. It would also make Trump +160 a horrible value since at 11% probability he *should* be +800 or thereabouts. Are there enough ‘suckers’ in the betting public willing to make such a horrible theoretical bet just because of Trump’s name recognition? Are the so enamored of his celebrity that even Europeans–who theoretically would have a more objective perspective on the race–willing to make such a statistically disadvantageous bet?
I sure don’t see it that way. If the polling inspired any confidence at all you would see significantly different betting patterns. I’m of the opinion that the betting odds are much more accurate than the polling data. To quickly summarize a complex scenario Trump’s path to victory is the same as it was in 2016. There’s more enthusiasm for him among his support base than there is for Biden–just like it was for Hillary in 2016. There’s nothing to suggest that a huge percentage of Trump supporters will cross the aisle to vote for Biden. There’s also little to suggest that the 50% of the electorate that doesn’t vote will all be motivated to get out and vote for Biden. Despite the unprecedented COVID-19 pandemic many of the ‘fundamentals’ of the 2020 election are almost identical to 2016. That means that Trump most definitely has a chance to be re-elected.
