Election Betting Says Coalition By 40+

Ten days ago, I wrote that using implied probabilities from Sportsbet and Centrebet odds to simulate the result of all 150 federal seats, the most probable outcome would be a 32 seat Coalition majority in the House of Representatives. At that time, the most probable outcomes were 91 or 92 seats for the Coalition, 56 or 57 for Labor and 2 or 3 for independents.

I ran the simulation again early this morning, using the latest available odds on both sites, just prior to the suspension of internet betting as the polls opened.

Now the most probable outcome in the simulation is 98 seats for the Coalition, 49 for the ALP and 3 independents, giving the Coalition a 46 seat majority after winning an extra 25 seats.

Why the 7 seat change over the last 10 days?

Firstly, there are several seats which have flipped to the Liberals in the betting: Kingsford-Smith, Parramatta and Werriwa in Sydney, Lilley (Wayne Swan’s electorate) and Petrie in Brisbane, Hindmarsh in Adelaide, Brand in Perth and Lyons on the east coast of Tasmania. The only one of these which I strongly doubt is Werriwa, Gough Whitlam’s old seat. There might be a few aspirational Liberal voters in Denham Court and the newly developed suburbs, but I can’t see it falling to the Libs. Even discounting Werriwa, that’s 7 in which the Liberals are now favoured. The outcome could easily be Lib-ALP 5-2 instead of the 2-5 it looked like a couple of weeks ago.

Secondly, a number of seats in which Labor were paying around 1.40 are now even money: Page in NE NSW, McEwen just north of Melbourne, Blair and Capricornia in Queensland and even Lingiari (all of the Northern Territory outside of Darwin).

Note that the simulation is predicated on the bookmakers’ payouts being accurate representations of the true probabilities of each candidate winning. In fact, they are as much determined by how much has been bet on each candidate as any statistical analysis of booth returns and polling. Having said that, I wouldn’t expect the money to be flowing one way and votes the other. The best we can say without being able to train the model on betting data from previous elections is that payouts are highly correlated with outcomes.

For example, in Kevin Rudd’s seat of Griffith, the Libs are paying 2.75 and Rudd 1.35. That translates into a probability of 30% of Rudd losing his seat. While I’d like to see that happen, I believe $1.35 is pretty generous odds for Rudd to retain his seat.

Bob Katter and Andrew Wilkie are now almost certainties to be returned. Independent Cathy McGowan is now paying 1.90 to Sophie Mirabella in Indi and the Greens’ Adam Bandt has shortened to 2.35 in Melbourne. That’s why the simulation produces a much higher frequency of outcomes where we have 3 independents (Greens included). Even Clive “Skywhale” Palmer has come in to $5 from $8 a week ago (although I think that significantly overestimates his chances).

So, if I discount the seats where I think the betting is skewed, such as Werriwa, the Coalition is still probably up 4 or 5 seats on their position ten days ago.

I reckon that most likely puts them on 94 or 95, with Labor 53 and 2 or 3 independents ie. a 40 seat majority.