College Betting

One of the original purposes of this weblog was to explain things about the United States to people born and/or living outside of it. I drifted away from that, but this post comes back to it. I had been listening to the most recent "Question Time" episode of The Rest Is Politics, and in it, Messrs. Campbell and Stewart covered two topics in succession, "Explaining the American Electoral College system" and "Why is there such a large divergence between polls and betting markets?" I wasn't impressed with the way Mr. Campbell dealt with the second of these topics, mainly because I don't think that he understood how it related to the first. And so his answers felt more like guesses (although reasonable ones). So I'm going to take a crack at both of them.

The Electoral College of the United States is a body that comes into being once every four years, and its role is to vote on who should be the next President and Vice President. This is the count that actually matters, not the popular vote totals. There are 538 seats in the Electoral College, which is why Nate Silver originally named his site (now part of ABC News) FiveThirtyEight.  To win the Presidency, a candidate needs a simple majority, or 270, of the electoral votes. Each state has a number of electors equal to the size of its total Congressional delegation (Representatives plus Senators). Washington D.C. also has three electors, as if it were a small state, and that's what creates the 538 seat total. In almost all of the states, whichever candidate wins the popular vote in that state receives all of that state's Electoral College votes; they are not divided proportionally.

As a result of its construction, the Electoral College favors small states over large ones. This is in part because when one divides the population of the United States by 435 (the size of the House of Representatives), the resulting number is larger than the populations of the least-populous states, yet those states still receive at least one Representative. Montana has, after the 2020 census, one Representative per approximately 540,000 people (mainly because it has enough population to have two Representatives), which is less than the average size of a Congressional District, which is about 750,000 or so people. That each state also receives two Senators also skews the Electoral College away from the popular vote. Wyoming, with its single Representative and two Senators, receives 3 Electoral College votes, or one for every about 271,000 people who live there.

The larger states, and those that just miss the cutoff for an additional seat in the House of Representatives are the ones that lose out, because the states in those categories tend to be ones with large urban areas; accordingly, the urban/rural divide in American politics comes into play. The citizens of the states with highly populous "Blue" (Democratic leaning) cities find that their votes "count for less" than people who live in states that are composed of mostly (or exclusively) "Red" (Republican leaning) small towns. This is also why the Republican share of the House of Representatives tends to be higher than their share of the popular vote across all House elections.

This becomes the explanation for why the betting markets don't necessarily line up with the "polls," even if one presumes that those polls are 100% accurate reflections of how the actual popular vote would turn out. (Which they aren't; and they aren't intended to be.) When most people talk about polls in the United States, they tend to be referring to national polls. And, for the reasons I laid out above, those national poll numbers are meaningless when attempting to sort out who is likely to win a Presidential election.

The states (and the District of Columbia) can be ranked according to their propensity to vote for a Democratic or a Republican candidate for President. And for between 44 and 46 six of these, it's effectively already known who is going to win the state/District. They may as well not even be voting in November. I, for example, live in Washington State, which is considered Blue. All of the state's electors will be voting for Vice President Harris, because there's absolutely no question that she'll win the popular vote statewide. This is so much of a given that Donald Trump may as well not even be on the ballot here. (Candidates for President come to Washington to fundraise, not to campaign.) Were he to actually win this state, it would be such an upset that everyone would be talking about it. So it's the 5 to 7 "swing" states, in which the outcome is still undetermined, that will decide the winner. And if one is putting money on the outcome, the only polls that matter art the ones in those states. And right now, despite the fact that Vice President Harris has a lead in the national polls, the swing state polls are a lot closer and tend to favor Donald Trump slightly. And so do the degree that the swing state-specific polls deviate from the national poll numbers, that's what any bettor who actually hopes to see their money again is paying attention to.