Federal Election Betting Shows Coalition Firming But Labor Victory

I’ve done a series of 3 simulations of the May 18 Australian federal election using the betting odds. Sportsbet, Beteasy and Ladbrokes have all provided odds for every seat from mid April, just after the election was first called.

The simulation dates were 15 April, 25 April and today (election eve), May 17.

The exact method of simulating the probability distribution of possible election results is described in detail in my post simulating the 2013 federal election.

In brief, any seat for which all 3 betting agencies have one candidate paying 1.10 or less is deemed safe and allocated to that candidate. For the remainder of contested seats, I derive the probability of winning in each seat from an average of the implied probabilities from the 3 sets of bookmaker odds. I used 10 simulations of 100,000 runs each. In each run, a winner for each contested seat is decided by a random draw of each candidate, with the probabilities derived from the odds for that seat.

Each set of 100,000 runs gives an estimated probability distribution for the number of seats won by each party (and independents). The 10 sets of runs are to determine the stability of the distribution estimates.

In the current parliament, there are 150 federal seats, so 76 required to form a majority government. The Coalition (LNP) currently has 73, with Labor (ALP) 69 and 8 on the cross benches, although one of those is the Nationals’ Kevin Hogan from Page (northern NSW), who is there in protest at the ousting of Malcolm Turnbull.

However, with significant recent population changes in Victoria, South Australia and the ACT, an electoral redistribution last year gives the new parliament 151 seats, still requiring 76 to form a majority government. Victoria’s seat allocation has increased from 37 to 38, the ACT’s from 2 to 3 and South Australia’s is down from 11 to 10.

In the first simulation on April 15, there were 52 safe ALP seats, 20 for the Coalition and 1 independent: Andrew Wilkie in Clark in Tasmania. The imbalance was due to the bookmakers initially giving odds of 1.15 or 1.20 for many normally safe LNP seats in Queensland and Western Australia in particular.

The additional 78 contested seats were simulated and returned the most likely scenario of 91 or 92 seats for Labor, 52 or 53 for the Coalition and 7 on the crossbenches, most likely: Andrew Wilkie in Clark, Bob Katter in Kennedy (Nth Qld), Rebekha Sharkie in Mayo (Adelaide), any 2 or 3 from Rob Oakeshott in Cowper (centred on Port Macquarie), Kevin Mack in Farrer (western NSW), Helen Haines in Indi (country Victoria), Zali Steggall in Warringah (Sydney northern beaches), Kerryn Phelps in Wentworth (Sydney eastern suburbs), plus the Greens’ Adam Bandt in Melbourne and possibly Steph Hodgins-May in the neighbouring seat of MacNamara (inner city south and south east Melbourne).

The probability of an outright Labor majority was > 99%.

The simulation 10 days later on April 25 showed the Coalition closing slightly. The most likely scenario was 89 seats for Labor, 55 for the Coalition and the same 7 on the crossbenches. The probability of an outright Labor majority was still > 99%.

Over the past 3 weeks, the Coalition have been gaining some traction and opinion polls have been gradually shifting more toward them, though probably not sufficiently for a victory tomorrow. This has certainly been reflected in movements in the seat betting odds.

In today’s analysis (May 17), there were 59 safe ALP seats, 26 for the Coalition, 3 independents (Andrew Wilkie in Clark, Bob Katter in Kennedy, Rebekha Sharkie in Mayo) and 1 Green (Adam Bandt in Melbourne). The most likely scenario was 82 seats for Labor, 62 for the Coalition and 7 on the crossbenches.

The remaining 4 cross benchers are most likely Rob Oakeshott in Cowper, Kevin Mack in Farrer, Helen Haines in Indi and Zali Steggall in Warringah. Zali Steggall has come in to 1.40 and looks like removing Tony Abbott (if the betting can be trusted).

That ultimately may not be a bad thing for the Liberals, because short of an “unfortunate” accident, it’s pretty much the only way they will get the ignorant wrecker Tony Abbott out of parliament. They are almost certainly going to be in opposition for at least 3 and possibly 6 years. Zali Steggall can’t do much damage because Labor will have an absolute majority and will implement their agenda (which she largely supports) without her. The Liberals can then preselect a new candidate in Warringah who will win back the seat, as Dave Sharma now looks increasingly likely to do in Wentworth, removing the aberration of barely disguised left wing activist Kerryn Phelps representing one of the wealthiest electorates in Australia.

The Greens have gone out to around 3.00 in MacNamara, but come in to 2.50 in the once apparently safe-ish neighbouring Liberal seat of Higgins, so they could also still pick up a second lower house seat.

The LNP gains from the 2 previous simulations were largely firming seats in Queensland and Western Australia, although Banks, Lindsay and Page in NSW have flipped from likely ALP gains to LNP holds.

The estimated probability of an outright Labor majority has reduced to 94%. However, given the left leaning Andrew Wilkie and Adam Bandt, the possibility of Zali Steggall and maybe even a 2^nd Green, Labor only really needs to get to 73 seats to form a government. The simulation estimates the chance to be 98.5%, with 74 seats at 97%.

With these odds, Labor should be paying about 1.03 as the sworn in government. But the 3 sites have them at 1.14, 1.14 and 1.15. Very generous odds, I suggest.

The Hawke Factor:

Will Bob Hawke’s death yesterday help swing the result to Labor?

Yes. A simple reason: brand recognition.

He was genuinely one of Australia’s best and most popular prime ministers. He had genuine vision and made important, lasting economic reforms, without the conflict. So it’s not unreasonable for there to be extensive coverage of his contribution to public life and the nation.

But his death couldn’t have come at a worse time for the Coalition campaign.

Hawke represented Labor ideals. Hawke was good. Therefore Labor is good. That will be the association in many people’s minds from all the coverage. It’s largely subconscious. It will almost certainly sway some undecided voters.

And of course the media arm of the ALP: the ABC, SMH and Age have been going out of their way to use their tributes as ads for their Labor masters.

For the Coalition, the one positive is the number of people who have already cast their vote.

Of course, that also increases the uncertainty in any simulation using current betting odds.