Betting the 2020 Election

I want to start by mentioning that this newsletter was composed on Tuesday, October 27. With just a week until the designated election day, it's important to note that numerous individuals have already cast their votes through mail-in ballots or have voted early.

With that said, let’s take a look at the prevailing odds presented in the European style across several betting platforms that allow bets on the election.

SPORTSBOOK	BIDEN	TRUMP
PINNACLE	1.50	2.76
BET ANY SPORTS	1.53	2.65
BETFAIR	1.50	2.98

Now, let’s review the same odds formatted in the American style.

SPORTSBOOK	BIDEN	TRUMP
PINNACLE	-200	176
BET ANY SPORTS	-190	165
BETFAIR	-200	198

Analyzing the data and extracting the average from three different sources, we determine that Biden has a 65% chance of winning.

As is well known from the workings of the Electoral College, the election will hinge on a few key swing states. Let's delve deeper into this aspect. The table below illustrates the likelihood of Trump securing victory in all 50 states plus the District of Columbia. In the cases of Nebraska and Maine, electoral votes are split based on congressional districts, with the statewide winner receiving two additional votes. In this scenario, only one congressional seat is competitive. FiveThirtyEight project 2020 Most states are not on the fence regarding their support, leading me to assign Trump either a 0% or 100% chance of winning those states. For the remaining states, I relied on the odds provided by Pinnacle Sports, carefully calculating the averages.

The data indicates that Trump is projected to secure 227 electoral votes. It's worth noting that a candidate requires 269 votes to achieve a tie and 270 to claim victory.

State	Electoral Votes	Prob Trump	Expected Trump Votes
Alabama	9	100.0%	9.00
Alaska	3	100.0%	3.00
Arizona	11	43.6%	4.80
Arkansas	6	100.0%	6.00
California	55	0.0%	0.00
Colorado	9	0.0%	0.00
Connecticut	7	0.0%	0.00
Delaware	3	0.0%	0.00
District of Columbia	3	0.0%	0.00
Florida	29	55.8%	16.19
Georgia	16	60.2%	9.64
Hawaii	4	0.0%	0.00
Idaho	4	100.0%	4.00
Illinois	20	0.0%	0.00
Indiana	11	100.0%	11.00
Iowa	6	61.0%	3.66
Kansas	6	100.0%	6.00
Kentucky	8	100.0%	8.00
Louisiana	8	100.0%	8.00
Maine (1)	1	50.0%	0.50
Maine (3)	3	0.0%	0.00
Maryland	10	0.0%	0.00
Massachusetts	11	0.0%	0.00
Michigan	16	28.1%	4.50
Minnesota	10	27.2%	2.72
Mississippi	6	100.0%	6.00
Missouri	10	100.0%	10.00
Montana	3	100.0%	3.00
Nebraska (1)	1	50.0%	0.50
Nebraska (4)	4	100.0%	4.00
Nevada	6	30.5%	1.83
New Hampshire	4	0.0%	0.00
New Jersey	14	0.0%	0.00
New Mexico	5	0.0%	0.00
New York	29	0.0%	0.00
North Carolina	15	47.7%	7.16
North Dakota	3	100.0%	3.00
Ohio	18	68.2%	12.27
Oklahoma	7	100.0%	7.00
Oregon	7	0.0%	0.00
Pennsylvania	20	35.2%	7.04
Rhode Island	4	0.0%	0.00
South Carolina	9	100.0%	9.00
South Dakota	3	100.0%	3.00
Tennessee	11	100.0%	11.00
Texas	38	74.2%	28.20
Utah	6	100.0%	6.00
Vermont	3	0.0%	0.00
Virginia	13	0.0%	0.00
Washington	12	0.0%	0.00
West Virginia	5	100.0%	5.00
Wisconsin	10	31.1%	3.11
Wyoming	3	100.0%	3.00
Total	538		227.12

If we consider the results from the toss-up states as being independent of each other, the standard deviation of the actual electoral votes could be 30. This reflects a scenario that is 1.43 standard deviations away from the required 270 votes. The probability of such a result favoring Trump stands at 7.7%.

That said, it's important to recognize that the outcomes of these states are probably not independent. In 2016, Trump won every battleground state with the exception of Nevada. This time around, turnout will be the critical factor. The number of undecided voters is minimal, and any factors influencing turnout are likely to affect the states in similar patterns.

Thinking about it differently, there are currently 125 electoral votes secure for Trump, 216 for Biden, and 197 that are considered battleground votes. Notably, Texas is included in the battleground category. Trump needs to win 145 of those battleground votes for victory.

Another crucial factor to consider is that if initial results show a close margin, the dispute will likely be taken to court. Should the case reach the Supreme Court, similar to the events of 2000, Trump's 6-3 majority there would almost certainly favor him.

In conversations surrounding this election, the 2016 contest frequently resurfaces, with many drawing parallels suggesting 2020 will mimic that year. Reflecting on 2016, at this very time four years ago, Clinton led the polls by four points. So, what led to her loss? The polls were off by roughly 2%, which isn’t a large discrepancy. Clinton did win the popular vote by that same margin, but she lost the election because the Electoral College tends to favor less populous states that lean Republican—similarly to how the Senate often has a Republican majority. I admit my surprise on election night, but the outcome was less shocking than many people describe.

Currently, Biden enjoys a lead of 9 to 10 points*. This is 4 to 5 points above Clinton's position at this point in 2016. Below are the states that Trump won by margins of less than 4 points, detailing the votes he secured and the corresponding electoral votes**.

Here are the electoral results from the 2016 election:

STATE	ELECTORAL VOTES	TRUMP MARGIN OF VICTORY
MICHIGAN	16	0.4%
PENNSYLVANIA	20	0.7%
WISCONSIN	10	0.8%
FLORIDA	29	1.2%
NEBRASKA 2ND DISTRICT	1	2.2%
ARIZONA	11	3.6%
NORTH CAROLINA	15	3.7%
TOTAL	102

If we assume that faithless electors wouldn't have acted differently had it impacted the outcome, we could assign two electoral votes from Texas to Trump and five from Washington state to Clinton, leading to the public's intended outcome:

Trump: 304

Clinton: 227

Faithless electors***: 7

If we award Trump all the states and districts he won in 2016, except for those listed above with a victory margin below 4 points, then the 2020 outcome could be projected as follows:

Trump: 306

Clinton: 232

In summary, I believe Biden’s current advantage in the polls is too substantial for Trump to overcome. Ultimately, while polls are not votes, individuals and judges do have a say, which means unpredictability remains. I would estimate Trump's chances of winning to be around 25%. Consequently, a fair bet on Biden would be -300, implying you would wager 3 to win 1. This makes a 2 to 1 bet on Biden seem like an attractive option. I believe the betting public is still too focused on the results of 2016, which presents a good betting opportunity for Biden.

Trump: 202

Clinton: 334

Although I previously suggested betting on Trump earlier in the year, it appears my assessment may have been incorrect. Now, at this advanced stage, I would advise placing bets on Biden instead. Of course, I can't guarantee anything. To back up my words with actions, I recently placed a $7,000 bet on Biden to counterbalance my earlier bets on Trump. If I can identify a reliable party, I may consider betting more on Biden.

There are just 8 days remaining: Biden's lead over Trump appears stable, contrasting sharply with Clinton's decline at this same timeline.

Sources:

*CNN: 2016 United States Presidential Election

** Wikipedia: Faithless Electors during the 2016 United States Presidential Election

*** Wikipedia: Statistically sound strategies and insights designed for casino games like blackjack, craps, roulette, and numerous others that can be played.

Written by: Michael Shackleford