What are the Odds for the 2020 US Presidential Election?

Today the ScoreMetrics Lab ventures outside of sports betting markets and takes a look at the odds for the 2020 US presidential election. Yes, you read it right – you can wager money on who’ll be the next president! 

We’ll explore how bookmakers have fared in predicting previous presidents and whether or not the odds given by them have reflected reality. We’ll also try to answer whether smart investors with a good feel of the US political landscape can exploit inefficiencies in this betting market.

Read on to find out what we discovered!

Past presidential election odds

Donald Trump’s 2016 campaign surprised many, including the bookmakers. Trump went all the way from being a +2500 underdog in the summer of 2015 to +190 on November 1st in 2016. Hillary Clinton was still a -275 favorite a few days before the election. 

The oddsmakers did much better in their lines for the 2012 presidential election. Barack Obama was favored with a -220 line in February of 2012 against Mitt Romney and the rest of the field to get a second term in office. 

But back in the leadup to the 2008 presidential election, bookmakers were giving him less than a 10% (+900) chance to win in November 2007 and had him at about 30% (+233) in early February 2008. 

In all of these cases, the odds given fluctuated wildly as campaigns went along and new information became available. Major events, like the 2008 financial crisis, also affected voter and bookmaker sentiment. From this extremely small sample size, we can conclude that the oddsmakers were not very good at predicting Trump’s and Obama’s first terms but were right on the money for Obama’s second run in 2012.

2020 US presidential election odds

Let’s have a look at how the odds for the next US president have developed since the beginning of the year.

As you can see, Trump has stayed as the constant favorite, but the Democratic candidates have seen some big swings in their odds. You’ll also notice that bookmakers are listing odds for Hillary Clinton even though she’s not actively campaigning. New York governor Andrew Cuomo has also entered the picture in the odds table despite declaring that he will not be running for president. 

Candidate

Apr-22

Apr-08

Apr-02

Mar-28

Mar-16

Mar-04

Feb-27

Jan-29

Jan-07

Donald Trump

-125

-120

-115

-115

EVEN

-150

-180

-135

-115

Joe 

Biden

125

140

140

130

-105

160

2000

550

400

Andrew Cuomo

3300

2200

1000

2200

N/A

N/A

N/A

N/A

N/A

Bernie Sanders

OTB

2500

1800

3000

3000

1200

275

250

700

Mike 

Pence

5000

5000

6000

6000

3000

20000

12500

12500

8000

Hillary Clinton

5000

6000

6600

6600

5000

6000

8000

5000

4000

Nikki 

Haley

15000

10000

10000

10000

10000

50000

30000

15000

10000

It’s pretty remarkable how little Trump’s odds have moved throughout this year. Even the COVID-19 pandemic has not affected the bookmaker sentiment for now. 

As we concluded earlier, the bookmakers were right in predicting Obama’s second term. Based on that, would betting on Trump make sense right now?

The last three presidents (Bill Clinton, George W. Bush and Barack Obama) all got second terms in office. But overall, only about a third of US presidents (16 out of 43) before Trump got to serve consecutive terms. So historically, this recent trend does not hold up. 

However, one should also look at trends related to the rest of the field. Recent history tells us that while there have been repeat presidential candidates in all but one presidential election since 1988, none have not won it since then. In that light, history is not on the side of Joe Biden here. 

Before that though, there was a history of Republican presidents-to-be to have to run multiple campaigns before getting into the office. Richard Nixon, Ronald Reagan and George H.W. Bush were all repeat candidates. 

Based on these pieces of historical data, Trump might have a pretty good shot at repeating his term. But presidential campaigns have rarely been anything close to sure shots. It’s extremely hard to predict what might happen between now and November and how voter sentiment might change over time. With long to go before the election, a -125 line returns a pretty lousy profit when you take into account all of the variables that might affect the result.

Odds for the Democratic candidate

There is also a live betting market available for the Democratic candidate. The consensus is pretty clear right now – Joe Biden is very likely to be the winner.

Let’s look at the odds history:

Candidate

Apr-22

Apr-09

Apr-03

Mar-31

Feb-25

Jan-29

Jan-02

Joe Biden

-1200

-1600

-600

-450

1000

185

200

Bernie Sanders

N/A

N/A

1200

1000

-130

160

350

Andrew Cuomo

1400

2200

1000

750

N/A

N/A

N/A

Hillary Clinton

2000

2500

2000

2000

2800

2000

1600

Michelle Obama

4000

4000

4500

5000

15000

8000

N/A

Tulsi Gabbard

N/A

N/A

N/A

N/A

50000

15000

N/A

Michael Bloomberg

N/A

N/A

N/A

N/A

400

500

450

Pete Buttigieg

N/A

N/A

N/A

N/A

1100

1400

600

Elizabeth Warren

N/A

N/A

N/A

N/A

8000

1500

450

We can see from the table that the odds have fluctuated pretty wildly throughout 2020. At the end of February, Bernie Sanders was the -130 favorite to grab the candidacy, while Joe Biden’s odds were all the way up to +1000. At that point, the oddsmakers thought Michael Bloomberg to be a more likely candidate than Biden. A month later, things had drastically turned around between Biden and Sanders, while Bloomberg was already out of the picture. 

In an interesting study, Bianco Research conducted that the nomination betting odds haven’t been very telling in recent years. When looking at the lines given in December of years prior to the last three presidential elections, only Hillary Clinton (2015) and Mitt Romney (2011) were favored by bookmakers and actually won the nomination.

During that same period of time, Ted Cruz (2015), Rudy Giuliani (2007) and Hillary Clinton (2007) were favored but did not get nominated.

Conclusion

Having a betting market available for the US presidential election is certainly interesting and fun. But it’s incredibly hard to build solid investment cases in this market due to the immense complexity of variables that can affect the result of the election. 

Couple that with very small samples of data available and an ever-changing political landscape, and you’ll see why we don’t exactly see a lot of great opportunities in this market. 

For a much better shot at solid profits, don’t forget to check out John Todora’s new book – “Zero Correlation Investing – The Score Metrics Secret”, which is on sale now for a limited time.

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