Politics
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Using the betfair election state betting odds we can imply the probability that a state is won by the dem or the rep party.
We also know the number of the number of seats each state brings to the electoral college. For each state we can generate
from the uniform distribution to simulate which party won the state. We can do this for all states and arrive at an election outcome.
This process can be done mutiply times (10,000s etc.) and from it we can arrive at next president probabilities/ odds. Doing this
with the current betfair state odds one arrives at the following probabilities:
Biden win approx 90.9%
Trump win approx 8.5%
Tie 0.6%
Obviously this makes the rather large assumption that states results are independent (If biden loses Penns hes more likely to also lose Florida/ Georgia etc.)
All that been said it does seem a striking mismatch between the state betting odds and the next president market. Thoughts?
We also know the number of the number of seats each state brings to the electoral college. For each state we can generate
from the uniform distribution to simulate which party won the state. We can do this for all states and arrive at an election outcome.
This process can be done mutiply times (10,000s etc.) and from it we can arrive at next president probabilities/ odds. Doing this
with the current betfair state odds one arrives at the following probabilities:
Biden win approx 90.9%
Trump win approx 8.5%
Tie 0.6%
Obviously this makes the rather large assumption that states results are independent (If biden loses Penns hes more likely to also lose Florida/ Georgia etc.)
All that been said it does seem a striking mismatch between the state betting odds and the next president market. Thoughts?
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Betting odds are dictated by the weight of punters money. Often the true chances of a result happening, particularly in politics, bear no resemblance to the betting odds.
a) they aren't independent
b) the markets believe that trump will try to cheat his way to a win
b) the markets believe that trump will try to cheat his way to a win
Trump has been a shorter price than
the reps for most of the past week or so
On many occasions creating an arb.
Something wrong.
the reps for most of the past week or so
On many occasions creating an arb.
Something wrong.
Agreed PP. It does seem that either the state by state betting market is mispriced or the next president market is. But very good point from dave1357 the state markets are correlated.
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