This article first appeared at casino.org on 20th September 2021
The most significant national election of 2021 takes place next weekend, as Europe’s biggest economy goes to the polls. It has already been an extremely dramatic betting heat.
Merkel Retirement Is Proving Transformative
Chancellor Angela Merkel is retiring after 16 years at the helm, leaving something of a vacuum. The Christian Democrat – who leads a Union of two parties, the CSU and CDU – has enjoyed sky-high approval ratings that are unimaginable in most democracies.
Her departure is the likeliest explanation for the polling, and betting, drama.
Political gamblers in the English-speaking world may also find the electoral system and party dynamics alien. Rather than our ‘first past the post’ (FPTP) system, Germany elects its representatives on a mixed, proportional basis.
How The Electoral System Works
Each citizen gets two votes, theoretically towards electing 598 members to the Bundestag.
In reality, the nature of the system produces dozens more. The first, to determine the 299 constituencies, uses FPTP. The second vote is for a party list, to determine another 299 plus so-called ‘overhang’ seats.
These are awarded on a proportional basis, to better reflect the regional share of the vote and compensate those parties who were under-represented by the FPTP result.
Therefore if a party receives fewer members from the constituencies than its vote share would imply, they are compensated with top-up seats using a process known as the Sainte-Laguë method.
In order to receive these top-up seats in a particular region, a party must register a list of candidates there. To be eligible for any top-ups, a party must win either three constituencies via the first vote, or 5 percent of the second, party list vote.
Yes, the electoral system is complicated.
Only six parties expect to reach the 5 percent threshold.
Ranging from ‘hard left’ to ‘hard right’, they are Linke, Greens, SPD, Union, FDP and AfD.
The current government is a coalition between the Union and SPD – the mainstream right and left.
The Story So Far
Earlier this year, the betting strongly implied another win for the Union.
They were rated at 95 percent and 91 percent respectively on Betfair’s ‘Most Seats’ and ‘Party of Next Chancellor’ markets. New leader Armin Laschet was an 86 percent chance to be Chancellor after the election.
The principal challenge was expected from the Greens, led by Annalena Baerbock. They have been a minor coalition partner before, but never hit these mid-term polling heights, registering a peak of 29 percent.
Whilst SPD had always been the principal left option, they were in the doldrums. Their leader Olaf Scholz was matched earlier at enormous odds of 270.0 and the party at 200.0 for Most Seats.
These markets have transformed.
Merkel’s replacement Laschet has bombed in the polls and Scholz – who is Vice Chancellor and Finance Minister in the current coalition – is now a mere 1.32 chance and SPD are 1.24 for Most Seats. The Greens have fallen back to the mid-teens and Baerbock is now an outsider at 30.0.
Party List Vote Share Could Offer The Best Betting Value
In addition to those main options, tighter markets can be found for party list vote share, number of seats and particularly, the make-up of the next government – which will definitely be a coalition.
First on vote share, BetOnline offers an under/over line for all six parties. Their lines are SPD (26 percent), Union (23 percent), Green (16 percent), AfD (12.5 percent), FDP (12 percent) and Linke (6 percent).
Alternatively Betfair offers bands. In their case, SPD, Union and Green options cover a 5 percent range – e.g. 20-24.99 percent – or a 3 percent range for AfD.
PredictIt offers options on the number of seats won by SPD, Union and Greens.
Polls Are More Trustworthy In PR Elections
My preference here is Betfair, because 5 percent ranges are extremely wide, covering a considerable margin of error.
For example the Greens band of 15-19.99 percent – available at 1.9 – has landed in their last 33 polls, and 52 of the last 54. I’d price this band at around 1.2 so on that logic, the current odds represent outstanding value.
The consistency of polls is a key point and applies to all six parties. SPD have polled between 25-27 percent in 28 of the last 29 polls. This is reminiscent of other European elections using proportional voting systems and in stark contrast to the UK and USA.
PR systems tend to drive higher turnout and voters seem more content with, and to publicly state, their choices. Whereas our elections are often blindsided by differential turnout – see Brexit, the 2017 UK general election or shy Trump voters in 2020.