As most people out there are aware, the Republican National Convention wrapped up this past Thursday and it was during this event that Donald Trump announced that Indiana Governor Mike Pence would serve as his Vice-President in the event that he were to win the election. On the Democratic side, that Convention begins early next week, but in the late evening hours of Friday, July 22nd, Hillary Clinton announced that Tim Kaine, former Mayor of Richmond, Governor of Virginia and current Junior Senator from the State of Virginia would serve as her running mate.
With respect to political perception, these two choices may arguably have not been the best for either candidate, but the purpose of this Article is not to engage in any discourse as to what the candidates could have done, but is meant to be focused on what has actually happened. With that said, the argument in favor of Trump’s selection of Pence is that Pence is a pretty steady conservative who is actually to the right of many establishment conservatives and that this might help Trump appeal more to the party’s base. Also, while Pence may currently have slightly negative favorability ratings (though most people have indicated they don’t know enough about them to form an opinion) it could reasonably be argued that he has done at least an adequate job as Governor of Indiana.
On the other side of the Presidential Election process, the selection of Tim Kaine as Hillary Clinton’s running mate is more of a, ‘Safety pick,’ than anything else. While some people have suggested that Hillary might have picked someone more Liberal, (Kaine, for instance, is personally against abortion even though he is willing to defer to the laws in place permitting it) because such a person (like Elizabeth Warren) might be more compelling to get Sanders supporters to come over to warm up to Clinton, there was some concern that an unprecedented all-female major party ticket might be off-putting to some voters. Furthermore, it has also been speculated that such is the reason that Hillary Clinton did not choose a minority candidate to run on her ticket. Finally, Sherrod Brown was an option and may generally be considered slightly more Liberal than Kaine, however, that would have given the opportunity for Ohio Governor John Kasich to replace his Senate seat with a fellow Republican which would have the Democrats essentially sacrifice an important Senate seat.
With that out of the way, let us now take a look at how these two choices might have a direct impact on the probability of their candidates winning the election. When I use the term, ‘Direct impact,’ I am not referring to any opinion as to how these candidates might perform at their Vice-Presidential Debates, I am simply looking at whether or not either of these candidates come with a built-in advantage for the Presidential candidate in question.
It could be argued that Pence would increase the probability that Trump wins Indiana as most states have shown an overall tendency of increased voting on one side even if it is the Vice-President who will be representing their home State. This also seems to be the case intuitively. However, Pence is not especially popular within the State of Indiana, and even if he were, Trump should not need this built-in home field advantage to help him win the state. To put it bluntly, if the State of Indiana is so close that Trump even has a chance of losing it (with or without Pence) that would mean that he is getting absolutely pummeled in other swing states such as Florida, Ohio, Pennsylvania, Virginia and North Carolina...probably all of the above. The result of that is Indiana should not even be in play if Trump is to have any reasonable chance of winning.
On the other side, Tim Kaine also has a slight net unfavorable rating, although as with Pence, most people do not really believe they know enough about him to form an opinion. He is a fluent speaker of Spanish and, as a result, will deliver some speeches partially in Spanish without the need of a translator. It could be argued that Hillary Clinton already has a large advantage among Hispanics, but there is a huge difference between them supporting her on Internet and Phone Polls as opposed to actually turning out to vote for her. Energizing the minorities to come out and vote was a seriously big page, perhaps a chapter, in the Obama Playbook in both the 2008 and 2012 versions, and I do not expect that to be any different this time around.
Furthermore, it should be mentioned that Virginia is a swing state that is at least more likely to be extremely competitive than Indiana. For analysis on that, I am going to defer my uneducated and ignorant opinion to someone who is both extremely brilliant on such matters and well educated on this sort of Statistical Analysis: Nate Silver of Fivethirtyeight.com:
I will naturally let Mr. Silver’s Article speak for itself and do not want to borrow too much from it, so let’s skip straight to the bottom line: Virginia is not extremely likely to be what FiveThirtyEight considers to be a, ‘Tipping point,’ State meaning THE State that puts Hillary Clinton or Donald Trump over the hump, but they certainly recognize it as a potential swing state. After a careful analytical process that is described in Mr. Silver’s Article (which I strongly recommend you read) the ultimate conclusion he arrives at is that Tim Kaine represents a swing of roughly 0.7% in terms of Hillary’s percentage probability of winning the Electoral College.
While that is certainly not an extreme swing, if the polling continues to get closer, and as more polls are released in the swing States as supporters of Bernie Sanders, or of the 378,142 Republicans who also ran for the nomination this cycle decide what they want to do, it will become more clear just how close of a race we have. That 0.7% difference in projected probability of winning the Electoral College might not make much of an apparent difference now that Hillary Clinton still apparently enjoys a comfortable lead, but it could come into play if the race ends up tightening up.
Currently, FiveThirtyEight.com has the probability of Hillary Clinton winning the Election at 57.7% compared to 42.3% for Donald Trump and HahaDon’tMakeMeLaugh% for Gary Johnson, although that would make an amazing story and would be worth it (in my opinion) for the narrative alone. In any event, let’s take a look at some of the Presidential betting markets to see what the trends are in that regard at this time:
Bovada currently has the Republican Party at +195 to win the Presidential Election, so of course, the, ‘Republican Party,’ refers to Donald Trump specifically. I suppose that Bovada refers to a particular party in case one of the candidates drops out for one reason or another that they don’t want to have a, ‘No Action,’ as a result.
Using this Moneyline Converter:
I find that the +195 converts to an Implied Probability of Winning of 33.9%, so for those of you inclined to base things off of the numbers at FiveThirtyEight.com (as I am) the result is that you have a pretty good bet, here.
(195 * .423) - (100 * .577) = $24.785
That means that based on that Line and what they believe that the Republican Party’s (read: Trump’s) chances of winning are, the Expected Profit on a $100 bet is $24.79 which you do not need me to tell you is a very substantial advantage. Of course, Bovada is not the only entity out there at which a Presidential Futures bet can be made, so let’s take a quick look at a few others.
If you take a look at the current odds on PaddyPower, as of the time of this writing, they are offering a straight 2:1 on Trump to win the election, so that represents an even greater advantage for those leaning towards Trump than is offered by Bovada at this time.
PredictIt, which is actually essentially a Binary Options Market on these sorts of things, also essentially has someone able to buy Trump at 2:1 if they keep their Proposition until completion. Of course, with Binary Options, a person can theoretically sell the Option at a later time, so perhaps they ride a temporary surge in Trump’s numbers and then, ‘Dump Trump,’ or, excuse me, Dump their Trump options.
Furthermore, if I am understanding the website correctly, BetFair also appears to be offering what is essentially 3.45-FOR-1 odds on someone who wants to take Trump, which is essentially the same thing as +245, again, if I am understanding their format correctly. This would be an even better deal, far better:
(245 * .423) - (100 * .577) = $45.935
Hell, sign me up...and you know what? I’ll even vote for the guy!
Of course, Variance can apply to short-term trends in areas other than gambling, and some of those trends that the statement may apply to can be polling numbers with respect to Presidential Candidates or Candidates of any other race. Furthermore, there is something going on with WikiLeaks right now that is going to purportedly, ‘Expose,’ the Democratic National Committee, and perhaps Hillary Clinton herself, as, ‘Rigging the game,’ against Bernie Sanders. It remains to be seen whether or not something like this will serve to alienate some Sanders supporters who might have otherwise eventually voted for Hillary Clinton, or whether that may even drive them to Libertarian Party Candidate, Gary Johnson.
Furthermore, at least with respect to National Polling, Trump’s Polling numbers have improved recently and, at least in recent weeks, he appears to be closing the gap between himself and Hillary Clinton. It is difficult to say whether or not this trend will continue or whether Hillary Clinton might enjoy a, ‘Bounce,’ in polling after the Democratic National Convention is over, but based upon what I see right now, I think Trump may be undervalued.
I also have a tendency to try to look at the demographic of people who might be inclined to place bets on the Presidential Race Online as well as those who would tend to place bets supporting Clinton. One thing that immediately comes to mind is that savvy Internet users do trend slightly younger, so maybe there is some heavy betting coming in on the Clinton side (everyone loves a favorite) and the books are having to weigh things heavy to get some action on the Trump side.
Furthermore, I am also inclined to look at Trump’s Populist agenda and the demographic that some of his statements can reasonably be argued as appealing to (no opinion personally, just saying it could reasonably be argued) and I would certainly suggest that Trump might be able to outperform expectations in the Rust Belt in swing states such as Pennsylvania and Ohio. It is absolutely no coincidence that these two states are where the Conventions were held (Republicans-Cleveland, OH---Democrats-Philadelphia, PA) as not only are these Swing States, but they are also likely, ‘Tipping Point,’ states if I may borrow the FiveThirtyEight vernacular again.
I would obviously encourage all of the readers out there to conduct their own analyses of the probabilities of each candidate winning, especially since I am largely relying on the opinions of Nate Silver, (In fairness, he’s not often wrong) but as of the time of this writing based on the Odds posted, I would consider Trump anywhere from Moderately Undervalued to Seriously Undervalued. At any of the agencies that I mentioned if those sorts of Lines are still available, and anything where someone is getting 2:1 or better, really, I think that getting some money down on Donald Trump is an extremely strong play.
Once again, that does not mean that I think that Donald Trump is likely to win the Presidential Election in November. In fact, without going into any Political Opinion at this time, I think the exact opposite of that. It simply means that I believe he has a strong enough chance of winning that there is some serious value in the Lines that appear to be available right now. Often when it comes to bets on the Underdog, (largely because square money comes in on the favorite who is perceived as a, ‘Sure thing,’ rather than a, ‘Probable thing’) you’re going to end up with a losing bet more often than not even though you had an advantage at the time you made the bet. If that were not the case, then such a bet would not be on the Underdog.
By the way, does anyone know of where I can find some sort of, ‘Point Spread,’ betting just with respect to the number of Electoral College votes each candidate is going to get? If so, please let me know in the comments because I think that would be fun to try to analyze. As always, thanks for reading!