US Politics / Andrew Hughes / 18 October 2007 /

Politics expert Andrew Hughes tells us what the deal is on Betfair's US politics markets

With just over a year until the Presidential elections, the electoral cycle is moving on inexorably. In January, voting begins nationwide to choose the Presidential candidates.

The key feature for the Democrats is the dominance of market leader, Hilary Clinton. A cursory glance at the polls might suggest that her current price of 1.44 is justified. She holds twenty point leads nationally and similar margins in key early voting states like New Hampshire, South Carolina and Florida. But I think she should be closer to 2.0 or slightly higher and I would be laying at 1.46.

The main cloud on the Clinton electoral horizon is her comparatively puny single figure lead in Iowa. Traditionally the first state to vote, Iowa is hugely significant to Democrats. Last time round a poor showing there for early front-runner Howard Dean effectively ended his campaign. The Iowa vote is conducted by means of hundreds of meetings in churches and town halls so results there can be difficult to predict. Factor in her less than natural campaigning style and her tendency to throw in the odd unforced error (such as last week's floating of the unpopular 'Baby Bond' policy) and it is quite possible that she might not win there. And since early momentum in these campaigns is everything, a slip up in Iowa will see her price lengthen considerably.

In that context, the price about Barack Obama (7.6) is too high but the 17.5 about John Edwards is astonishing. He is an experienced campaigner, likeable personality and excellent public speaker. Like the last two Democratic Presidents, he hails from the southern states, an advantage for a party that needs to reach out beyond its metropolitan heartlands. More intriguingly still, polls show him as the top performing Democrat in head to heads with any of the Republican candidates. I suggest backing him at the current 17.5 as that will inevitably shorten.

The Republican race is more complicated. Nationally, Rudolph Giuliani has a clear lead but polling of likely Republican voters have him and his nearest challenger, Fred Thompson much closer, with John McCain third. To further complicate matters, multi-millionaire Mormon Mitt Romney, who has poured money into New Hampshire and Iowa, holds shrinking leads in both those states.

I think Giuliani's support is soft, deriving largely from memories of his performance in the wake of 9/11. A thrice-married man with a history of liberal positions on gun law, abortion and gay marriage, he has attracted the ire of many on the religious right, with one influential church group recently stating they would not endorse a Giuliani candidacy. At 2.62 he rates as a a definite lay.

As a Republican Mormon, Romney has a barrier of prejudice to overcome as well as an unfortunate reputation for changing his mind on social issues. His resources will keep him in the race for a while, but I expect the current 4.5 to lengthen steadily. John McCain is a stubborn fighter and is still hanging in there but his campaign has been stalled for several weeks and it would be a surprise if he did better than 4th in Iowa.

Fred Thompson is the best option. He has more solid conservative credentials than the other three and more potential for improvement, with polls showing that forty percent of voters are undecided about him, compared to fifteen percent for Giuliani. He is a natural campaigner, has charisma, presence and a certain celebrity. If he uses those qualities to good effect he can win over significant numbers of undecideds and wrap up the nomination. His current odds of 4.6 are about right, given his place in the polls, but I expect it to shorten and he is worth backing.

And in wide-open races such as this, it is always worth considering a plausible outsider. Look no further than Mike Huckabee. A Baptist minister, his Christian credentials are impeccable. Since many religious groups are disillusioned with the way Bush has governed and with politics in general, Huckabee may appeal to Republicans as the one man who can still get the 'religious vote' out. Currently trading at 40.0, I would put him at half that price and he has the potential to cause an upset.

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