Why don't betting markets believe in Donald Trump?
What do gamblers know that pollsters don't about the Republican presidential race?
With the exception of a few days in early November, Donald Trump has consistently led the polling averages since late July. What's more, Trump's current 33 percent vote share and nearly 17-point lead over the runner-up — currently Ted Cruz — are his high-water marks. No wonder he spends as much time talking about polls as policy. With just six weeks to go before the Iowa caucuses, the strength and stamina of Trump's numbers — like his health, apparently — are astonishingly excellent.
But betting markets aren't yet buying into Trumpapalooza 2016. London-based Betfair has Marco Rubio as the favorite at 39 percent, followed by Ted Cruz at 22 percent, and Trump at 21 percent. The billionaire developer and reality show celebrity is even further behind according to PredictIt, a New Zealand-based prediction market where candidates are bought and sold like stocks. Trump trades at 25 cents, compared to 38 cents for Rubio and 34 cents for Cruz. Prediction aggregator PredictWise puts the numbers for Rubio at 42 percent, Cruz at 22 percent, and Trump at 21 percent.
Indeed, if there's a place where support for Trump seems to have a hard ceiling, it's the betting markets.
A bit of history: Between the Civil War and World War II, New York was the center of an active election betting market that sometimes surpassed trading on stocks and bonds. Indeed, a 2012 study found that before scientific polling, "betting market prices reflected the final outcome with remarkable accuracy," competitive with late-campaign polls today. But today, in the modern age of ubiquitous polling, markets are believed to "simply follow the polls."
So why then are speculators strangely unmoved by Trump's polling prowess? In the Iowa caucus polls, Trump is neck-and-neck with Ted Cruz, while betting markets make Cruz the clear favorite there over Trump, 52-31 percent, according to PredictWise. In New Hampshire, the first primary, Trump has a wide polling lead but bettors have him tied with Rubio. If state polls are close, bettors give the non-Trump candidate the edge. And if polls show a clear Trump lead, bettors have it a toss-up. What gives?
That skepticism is probably driven partially by history. Over the past century, presidential nominations have typically been won by experienced politicians or former generals who defeated Hitler. The last nominee who was neither was Republican utilities executive Wendell Willkie in 1940. Then again, Mitt Romney was the GOP nominee in 2012 and ran almost exclusively on his business record rather than on one term as Massachusetts governor. (Thanks, RomneyCare!) A businessman nominee, at least in the GOP, isn't so far fetched.
So maybe there is something else going on here. I call it the Awakenings Syndrome, named after the 1990 film starring Robin Williams. Awakenings tells a fictionalized version of how neurologist Oliver Sacks found a drug in 1969 to "awaken" patients put into a catatonic state by a 1920s encephalitis epidemic. In the film, an old doctor is asked how he can be certain the patients are unthinking and unaware of the passage of time. His response: "Because the alternative is unthinkable."
Perhaps that explains why bettors aren't buying the pro-Trump polls. A GOP nominee — and thus potential next president — who crassly insults his rivals, offers barely considered policy proposals, and seems to have no respect for the basic freedoms and values that have made America great? Maybe it's just unthinkable.