The most significant gamble towards the 2020 US Election is underway. In the fortnight since Joe Biden declared his candidacy, the former Vice President has risen to clear second favourite behind Donald Trump, with his odds shortening from 14/115.0 to a new low of 11/26.4 this morning.
Biden opens up vast early primary lead
If the latest Democrat Nominee polls are to be believed, those odds will shorten further. The last five surveys record Biden ranging between 38 and 46%, amounting to a massive 23.5% RCP average lead. Few will be surprised to see him leading early but the scale is quite shocking. Can we trust it?
In a word, no. Betting this early on party leadership contests in any country is a risky business and US primaries are notorious. Candidates can dramatically rise and fall in literally a matter of minutes. Consider, for example, recent presidential primaries.
Early favourites have a poor recent record
This time four years ago, Trump wasn't even in the race. Hillary Clinton was generally regarded a shoe-in for the nomination at odds-on and firm favourite for the presidency. Once Biden opted out, that remained the case despite Bernie Sanders' popular, insurgent campaign.
The Republican favourite throughout 2015 was Jeb Bush. He traded below 2/13.0 but didn't even make the top-five. As argued consistently at the time, his lead was a false one, based primarily on name recognition. The first to challenge him for favouritism was Marco Rubio - who finished a distant fourth.
2012 was in some ways even more dramatic. Sarah Palin, Rick Perry, Herman Cain and Newt Gingrich all headed the Republican market at some stage. Of those, only Gingrich was on the eventual primary ballot. Mitt Romney ultimately prevailed. On the Democrat side, President Barack Obama ran unchallenged.
In 2008, Obama had started a long way behind the odds-on favourite Clinton while the Republican race was extremely volatile. Rudy Giuliani, Fred Thompson and Romney all led at some stage with only the latter proving competitive in third place behind John McCain - who was available at 20/1 plus going into election year.
Biden bounce smashes identity politics theory
The general assumption was that this Democrat race would be similarly open. 20 candidates have already thrown their hat in the ring and more could well follow.
Moreover, particularly after numerous younger new faces were elected at the mid-terms, a strong narrative had grown that the party would switch to a new generation.
Many also argued that they would prioritise diversity and identity politics that would be ruinous for old, white men such as Biden or Sanders.
Yet here we are, weeks out from the opening debate, and the best two known names are taking out over half the vote while widely tipped California Senator Kamala Harris is languishing on 7%. What is going on?
Name recognition and electability are his key assets
Name recognition is certainly a factor. That will change markedly over the coming weeks and months once the debates start and races in the key early states heat up. Biden's role as VP to Obama - still remarkably popular among Democrats - is a priceless asset, particularly among African American voters.
It also probably reflects Biden's perceived electability. When regarded likely to run in 2016, he polled way better than either Clinton or Trump. His RCP average lead against Trump was over 12%. This time polls for that head-to-head show Biden 7.3% up, with 11% undecided. Only Beto O'Rourke fared better in CNN's latest round of hypothetical match-ups.
Perceived ability to beat Trump in 2020 will certainly be paramount in Democrat primary voters' minds. I suspect more than anything. From that perspective, it is easy to make a case for backing Biden.
Because he is so far ahead, the debates and narrative will revolve around his strengths and weaknesses. If emerging relatively unscathed from the early debates, he could well sustain a big lead and rivals pressured into swinging behind the presumptive nominee.
If polls versus Trump hold up, bets placed now at the current odds of 11/26.4 will become worth their weight in gold. In a head-to-head, I'd price Biden no bigger than 1/31.33.
Past runs and lack of youth appeal are negatives
Whilst plausible, though, that scenario is anything but clear. Biden could just as easily become another Hillary - hyped on experience but a poor electoral candidate, hampered by baggage and an inability to connect with younger voters. He failed miserably when running twice before.
Nor are his politics necessarily advantageous for a primary. While other candidates endorse left-wing policies such as Medicare for all, free tuition and a Green New Deal, Biden is a pragmatic centrist, whose pitch will be aimed as much towards Republican defectors. These arguments will be central to the TV debates.
Early state polls offer a better guide
Remember too that national polls are far less relevant at this stage than early primary states. The successful candidate always wins one of Iowa or New Hampshire and the losers fall out of focus very soon afterwards. South Carolina and, given an earlier date next time, California will also be extremely important.
Biden's chance in those states, where rivals are already running energetic campaigns, is less obvious. In New Hampshire, he leads by merely 1%. Given their respective name recognition, I would argue Pete Buttigieg's 12% is more significant than Biden's 20%.
In Iowa, Biden leads by 4%. However local organisation is the key to winning these caucuses and this relatively late entrant may find himself playing catch-up. South Carolina and the South generally will be more fertile territory but in California, he'll have to beat Harris.
So what to make of the current market? Without being especially keen on Biden's chances, odds of 11/26.4 do have trading potential and I certainly wouldn't lay it. However this is a marathon, not a sprint and at this very early stage, longer odds bets are preferred. O'Rourke at 35/136.0 or even Iowa-born Eric Swalwell at 569/1570.0, given his prominence in the Russia probe.
Don't back Biden - lay Sanders
A firmer conclusion is that Sanders won't win. He didn't beat Clinton despite ideal conditions last time - a two-horse race against a fatally damaged establishment candidate - and no longer has a monopoly on left-wing policies.
Biden's large early endorsement suggests these voters are more moderate than Bernie's cheerleaders or Trump's propagandists would have us believe. To some extent poll respondents are choosing between a moderate or socialist candidate and the former is miles ahead.
Rather than backing Biden heavily now - which definitely carries short-term risk - lay Sanders. In addition to the series of lays of Trump recommended over the past two years, I've taken on Sanders at an average 15/28.4.
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