It has happened again. One race into the 2020 US Election and the betting carnage is under way. With 97% reporting from the Iowa Caucus, just 0.1% separates Pete Buttigieg and Bernie Sanders in terms of delegates.
Iowa produces another massive betting flip-flop
The former was matched at 1.021/50 last night for substantial sums, but is now out to odds-against at 2.186/5. Earlier in the piece, Sanders had been matched at 1.141/7.
The one conclusion we can certainly draw is that there will be no clear winner and therefore no clear narrative moving forward. With nobody reaching 30%, the betting on the race to face Donald Trump in November remains wide open.
Next we move onto New Hampshire, which hosts its open primary next Tuesday. Nine candidates have a big TV platform from which to make their case in a series of CNN Town Hall events, before a seven-way debate on ABC this Friday.
Friday's debate could be pivotal
Given the moment, the importance of this debate should not be understated. A mistake, or a star performance, could be transformative. That was certainly the case in 2016 on the Republican debate stage, altering the dynamics of the race and ruining the market leader for their nomination.
Heading in, three Republicans were well placed. Ted Cruz had won Iowa, Trump was ahead in the NH and national polls, but Marco Rubio was flavour of the month on Betfair. A late rally for third in Iowa had positioned him clear top of what pundits had defined as the 'establishment lane' that had won recent nominations - as opposed to the 'outsiders lane' where Trump and Cruz resided.
From his first contribution, Rubio imploded. Under attack from soon-to-be Trump surrogate Chris Christie, Rubio repeated a 25 second speech, word-for-word, immediately after his opponent had called out his reliance on memorised 25 second speeches. Literally within seconds, Rubio's odds on Betfair drifted markedly. He never recovered. Trump won NH easily and the establishment challenge faded.
Can Democrats be divided into lanes?
Many of the same dynamics are in-play for the Democrats this time. A similar narrative regarding 'lanes' is prevalent - 'moderate/establishment' versus 'progressives/socialists'. Tactics must involve attacking, usurping and forcing out those within your lane. New Hampshire is usually the race that whittles the field, as unviable campaigns lose relevance and run out of money.
The lanes theory involves the dubious assumptions that voters will stay in one lane. It didn't hold up in 2016, as GOP primary voters previously ascribed to an establishment name switched to Trump or Cruz. However, at this stage, let's assume the theory has some merit and run with it - if only because it will motivate debate tactics and the inevitable sniping on Twitter.
Coming out of Iowa, six candidates seem viable - of whom five will be on the stage (Michael Bloomberg must wait for Nevada). Bernie Sanders' core vote is solid but, to consistently record winning totals, it is assumed he mostly needs to eliminate Elizabeth Warren. In that sense, Iowa wasn't such a great result for the market leader.
Buttigieg squeezing moderate rivals
Supporters of unviable candidates switched disproportionately to Buttigieg in the second round of caucus voting. While that process doesn't apply to the NH primary, it is the same mental process that Democrats will be applying to their choices everywhere, as the realistic options become apparent.
Buttigieg's job, therefore, is to outshine, neutralise or even attack Joe Biden and Amy Klobuchar. I doubt he'll go for the jugular but they have every incentive to attack the early frontrunner. Mayor Pete's lack of experience is an easy hit.
Biden needs something big. His failure came in Iowa came as no surprise. He's never run a good presidential campaign and this one has been predictably uninspiring. An open primary - where dedicated activists have much less sway - helps him, but I suspect the former VP will continue to tank in the polls.
Unpredictable how Biden voters would split
If so, we can forget pretty much every poll for the later states, in which Biden has largely led. Up to 30% of the electorate becomes up for grabs. If the simplistic lanes theory stands up, those votes will largely go to Buttigieg, Klobuchar and, in due course, Bloomberg.
Bear this in mind before dismissing Klobuchar at 200.0199/1 for the nomination or 270.0269/1 for the presidency. She made good late ground in Iowa and has performed very well in recent debates. If the bottom falls out of Biden quickly, she could still come back. Remember these four high-profile races prior to Super Tuesday only generate 4% of the total delegates.
This month, however, will likely see the lanes start to cross over. According to the national numbers taken just before Iowa from Morning Consult, neither Buttigieg or Klobuchar are the leading three second choices among Biden supporters. They prefer Sanders (27%), Bloomberg (21%) and Warren (19%).
Doubtless Buttigieg will get a big polling boost from Iowa. He was already polling respectably in NH and could plausibly challenge Sanders (currently 1.21/5 favourite to repeat his 2016 win, in this state that neighbours his own, Vermont). Warren's state of Massachusetts also neighbours NH and she topped polls there last autumn.
Warren, Buttigieg to survive field whittling
At 22.021/1 and 55.054/1 for the presidency, both offer trading potential. Both have strong potential to win transfers from the fading Biden and the likely limited Klobuchar, advancing to a strong position in what will soon be a three, maximum four-runner race - one of whom will certainly be Sanders.
Watching on from outside is Bloomberg, and that could help. Following the chaotic IA counting process, a divisive, inconclusive TV debate will not generate enthusiasm for the current line-up. When the next round of head-to-head polls against Trump is published, expect the billionaire to fare better than anyone.
Follow Paul on Twitter and check out his website, Political Gambler.