#BrokeredConvention

It goes without saying that the political leaning of US states differs, and that results will therefore vary significantly between primaries. Yet basing betting strategy on that simple, easily attained knowledge will have yielded easy profits throughout this cycle.

For example, since primary voting began, the best time to back Donald Trump was between defeat in Iowa (fairly predictable on polling and demographic grounds), and victory in New Hampshire (entirely predictable on polling and demographic grounds). Later, Ted Cruz shortened dramatically following Super Tuesday and victory in his home state. So did John Kasich after predictably winning Ohio.

Likewise, gamblers that backed Ted Cruz or opposed Donald Trump a week or so before the Wisconsin primary will have either cashed out or be sitting on a great position. In the space of two weeks including only one race, Cruz’s chance rose from 12% to 29% on Betfair, while Trump fell from 72% to 50%.

Those marks altered to further extremes as results came in on Tuesday, with Cruz almost challenging for favouritism at one stage. As announced on Twitter immediately, I took the opportunity to cash in 50 units profit of my long-term Cruz position.

That saver doesn’t reflect a lack of confidence in Cruz. Rather, it is a cover in recognition that the market may move against him in the short-term.

Wisconsin was huge for him – a genuine breakthrough that cemented his role as the only realistic anti-Trump option and put real pressure on the front-runner. However the Badger State’s conservative movement, energised during years of political conflict under Scott Walker, made it more fertile territory for Cruz than may have immediately seemed obvious. It is not reflective of the next set of primaries in the North-East.

April is not likely to be a productive month for Cruz, with Trump heavy favourite to win all six primaries on the 19th and 26th. Sure, there has been a swing towards Cruz in various polls, but he remains way behind in all of them. One win out of six would represent success.

That doesn’t necessarily mean he will drift significantly in the betting during April. So long as Trump is set to fall short of 1237 delegates – the latest expert view on FiveThirtyEight predicts 1182 – Cruz will be popular in the betting. He would arrive at a contested convention with a massive advantage in terms of organisation and ability to accumulate delegates.

If it goes to a second ballot, I find it hard to see any other winner. Every delegate that Cruz and Kasich can deny Trump during April makes that second ballot likelier. In Betfair’s Brokered Convention market – regarding whether all candidates will fall short of a majority on the first ballot – ‘No’ is only rated around 44%.

Nevertheless, unless he implodes, Trump is much more likely to shorten in the betting throughout April, following those wins. At the end of the month, that conversation about 1237 will still be very much alive, and the narrative will have moved on from his terrible week in Wisconsin.

Between them, Cruz and Trump take out around 79% of the book. As it has for weeks, that seems way too low. John Kasich has no meaningful route to the nomination. Paul Ryan remains an exciting position to hold and plausible outsider, but a longshot nonetheless.

Think ahead to Cleveland. If Trump and Cruz are holding 80% of the delegates and the only two names on the ballot, having blocked changes to Rule 40, what will their combined odds amount to? I say 90% plus.

So if you believe Trump will be the nominee, or need a saver against Cruz, now is the perfect time to do it. If I hadn’t already covered at way too short a mark (1.38), I’d be doing so now on Trump at [2.0]. See below for my updated profit and loss on both the nominee and presidential market, and click here for my complete betting portfolio.

There are good reasons behind this decline. He’s just endured a terrible week, coming under fire over a whole range of comments, tweets and contradictory policy positions. Losing Wisconsin would be significant, and a massive boost for Ted Cruz.

However, every candidate has their correct price and I suspect that either one or both of the main candidates are now under-estimated. Combined, their odds equate to only 74% – implying there is a better than one in three chance of somebody other than the candidates who have won almost every state between them.

That is of course possible, and why I’m on Paul Ryan, but should it really be as high as 26%? If so, then perhaps Ryan is under-estimated at 7%. The third man, John Kasich, has an extremely difficult path and makes no appeal at 11%.

Note the combined percentages of all four is only 92%, implying an 8% likelihood of somebody else, barely on the current betting radar. The next shortest odds are Marco Rubio and Mitt Romney at 100.0 – neither of whom appeal at all. If stopping both Trump and Cruz would cause a revolt, picking either someone who had already lost this race, or the losing 2012 candidate, would probably cause anarchy.

This un-named other candidate surely has to be a genuinely fresh face to this race. Ryan is the most obvious, but there are others with potential. In expectation of more drama in this market over the next three months, I’ve had a speculative 2 unit bet on Nikki Haley at the maximum odds of 1000.0.

Haley is certainly a more realistic and electable alternative to Rubio, Romney or Jeb Bush. All it would take is a few rumours, or a few influential types to champion her cause, to get these odds to shorten up significantly. She’s popular with both the establishment and grassroots. Her endorsement was one of the most highly sought in this race. I don’t think she’ll be the candidate but at these odds in such an unpredictable scenario, she’s worth a punt!

Without something dramatic happening like Trump’s total implosion, though, it is hard to see how he drifts further than 2.06. After Wisconsin, the rest of this month offers a stack of winning opportunities. After New York and the North-East, the only Cruz path to the nomination will be via the convention. Plus if the polls were wrong tonight and Trump won Wisconsin, his odds would collapse.

Even if, as most now believe, we get a contested convention, Trump can still win on the first ballot by attracting enough unbound delegates to pass 1237. That probably depends how close he gets, but if he were only a few dozen short, it would be very realistic.

If truth be told, I cannot confidently price such a unique candidate in such a unique situation. Whereas Cruz is certain to stay in the race even if losing, because it suits his long-term political interest, Trump is totally unpredictable. I don’t trust Trump to not implode or quit, even if that seems highly unlikely. I don’t enjoy having short-priced bets that could lose without even offering the chance of a cash out.

Nevertheless, I certainly wouldn’t take him on at these odds. Better instead to have speculative trades on others – as has worked to good effect on Cruz and Ryan.

If one takes the view that the Republican Nominee can only be the candidate who earns the most delegates from the primaries, there is a rare opportunity to make money. Either Donald Trump or Ted Cruz will certainly emerge with the most delegates, yet their combined rating on the Betfair market is only 80%. Spread a £100 stake proportionally at respective odds of 1.49 and 8.0 now and, when one of that pair is confirmed at July’s convention, your return will be £125.

As the odds imply, however, it is not so simple. In fact, given that third candidate John Kasich only takes out 9% of the book at 11.5, Betfair punters are effectively saying there is a 11% likelihood of an alternative candidate who isn’t even in the race.

That extraordinary eventuality depends on whether either Trump or Cruz reach the target of 1237 ‘bound’ delegates by the conclusion of the primaries on June 7th. Without passing that threshold, the ‘winning’ candidate may lack the numbers to secure the nomination on the first ballot at July’s convention.