US Election: Five ways to profit from the side markets

Our man says Clinton for Nevada is the state betting nap
Our man says Clinton for Nevada is the state betting nap

Having scoured Betfair's wide range of side markets in detail, Paul Krishnamurty has identified a series of value betting opportunities and offers potential ways to profit from both candidates...

"Nearly a third have already voted and the signals from Nevada polling guru Jon Ralston clearly point in the Democrats' favour. Trump has two big problems. First the GOP base includes a high Mormon population... Second, a large, rising Hispanic population."

Back Democrats to win Nevada @ 1.44

With nearly £90M matched already, Betfair's Next President market is well on course to become the biggest political betting event of all-time. This main market, however, is only the tip of the iceberg.

For the serious political bettor, there's a bet to cover pretty much every angle. That includes odds on every state, the percentage totals of each candidate, turnout and the margin of victory. All will be traded in-running on election day itself. Here's my selection of the best current bets and most interesting markets to watch in the days ahead, with a view towards trading.

Clinton is tremendous value on the electoral college handicap markets

For those of us already on the long-term favourite, the last few days have been rather worrying. Opinion polls were already showing Hillary Clinton's big lead evaporating before FBI director James Comey threw an October Surprise into the mix last Friday.

Although evidence of the latest e-mail controversy actually hurting her electorally is thin, the market trajectory seems to assume it will eventually take its toll. At 1.374/11, she has drifted back to around a mark last seen after the first TV debate. Disregarding the potential for a late switch in voting sentiment, though, everything we know about state polls and early voting suggests that is a value odds-on bet.

This election is not settled by popular vote, which points to a dead-heat right now. Rather, the distribution of electoral college votes are the determinant and even Donald Trump's most ardent supporters will struggle to offer a plausible route to the required tally of 270.

In order to stop Clinton passing 270, Trump needs to either pull off some massive shocks that are on nobody's radar or win at least one of New Hampshire, Wisconsin, Pennsylvania, Michigan, Virginia or Colorado. With a 4% average Clinton lead, only the last-named is still rated a toss-up by RealClearPolitics - and many other projection models have already put CO in the blue column.

In fact, given strong polling and early voting trends in both North Carolina and Nevada, Trump will probably need to pull off at least two such longshots.

Even a very narrow Clinton win could lead to a one-sided electoral college. Barack Obama got 332 votes in 2012 without the 15 Clinton is on course to gain in NC. According to the RCP estimate, she could reach 374 by sweeping all nine toss-ups.

Betfair are offering six different handicap lines - with Clinton giving away between 24.5 and 149.5 start to Trump. Assuming the pair of them win every state, Clinton would need 282 to win the lowest line. Based on the RCP toss-ups, that means just NC and one of either CO or NV.

To beat the highest line and land a 5.04/1 upset, she'd need 344. That requires the same states as Obama plus NC. If she were to win Arizona's 11 votes, that leaves further room for error.

Another reason why these handicaps are the best way to back Clinton is that Trump is far from certain to win Utah. If those six votes go instead to Evan McMullin, we can subtract six from Clinton's targets.

Frankly those calculations make her good value on all six lines but, if forced to pick a couple, I'd go for 2.01/1 about -74.5 and 2.35 for -99.5 - requiring 307 and 319 respectively assuming Trump wins Utah. If she wins NC, NV and CO as expected, numerous routes to pass both are very realistic, including a single win in Florida. That key state is around a 50% chance alone, so why not take a handicap instead which allows alternatives?

If you fancy Trump, you must back him to win key states

An extension of the above electoral college projections is that it makes much better sense to back Trump in individual states. His 4.77/2 odds in Colorado, 4.47/2 in Pennsylvania, 4.3100/30 in New Hampshire or 4.84/1 in Wisconsin are all considerably bigger than his 3.814/5 outright odds.

It is virtually impossible to imagine a route to 270 that doesn't include at least one of those states. Yet he could very plausibly win one of them and still lose. Personally, I don't fancy Trump winning any of them so this is not a tip. Nevertheless, the lack of correlation between these state markets and the outright odds is startling and Trump backers should take note.

Back Clinton to win Nevada @ 1.444/9

Of all the state markets, this appeals as the best value favourite. Nearly a third have already voted and the signals from Nevada polling guru Jon Ralston clearly point in the Democrats' favour. His definitive prediction is imminent and anyone following his coverage can guess who it will be for.

As I explained last month in my key states preview, Trump has two big problems in Nevada. First the GOP base includes a high Mormon population - who are deeply troubled by their candidate. Second, a large, rising Hispanic population which has been predicted all year to register to vote in record numbers.

Evan McMullin remains under-rated to win Utah

Trump's Mormon problem is profound in Utah and, as advised last week, independent Conservative candidate McMullin could still be under the betting market radar. In the few polls we've seen, he is on a minimum of 20%, with Trump at a pitiful maximum of 34% (Mitt Romney scored 73% in 2012).

I think publicity will be decisive. McMullin's challenge is clearly becoming newsworthy in the state and his numbers have tremendous scope for improvement. Either Trump sceptics or undecideds could switch to him but most significant is the potential for a tactical vote by Democrats. If Clinton is seen as a no-hoper there, surely plenty of her supporters would switch, knowing it would place a huge hurdle in Trump's already narrow path to 270.

A Clinton landslide could still offer trading value

One big market casualty of the recent narrowing lies in the Democrat States Won market. Previously backed down to just 2.111/10, the highest 30 or more band is out to a dismissive 12.011/1. It may not seem obvious from national polls, but this is not a totally forlorn hope.

Either a late surge to Clinton (perhaps driven by another Trump scandal?) or her overwhelming ground and data advantage paying off could yet produce a one-sided electoral college. Moreover, just the suggestion of it would see these odds crash.

On the current RCP map, 22 states are in the Democrat column. So she would need to win all eight toss-ups (Maine CD2 does not count as a state in it's own right), or add one or two from the red column. This is not impossible. She has polled competitively in Utah, Texas and Alaska to name just three.



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