Paul Krishnamurty is a professional gambler and political analyst. He writes about US and UK politics at the blog The Political Gambler and on Twitter at @paulmotty.

Paul Krishnamurty is a British professional political gambler currently touring America to watch the primaries firsthand—and to bet on the election. He’s reporting regularly for Politico Magazine on how the gambling markets see the race—who’s up, who’s down and where the smart money is moving.

1. Marco Rubio in free fall


The saying that a week is a long time politics has never been more apt—we’ve seen a dramatic turnaround with Marco Rubio in that time frame. Coming out of Iowa, Rubio was getting blanket positive media coverage, and the market bought it completely: He was rated at a 58 percent chance to win the nomination and 26 percent for the presidency.

Then he bombed at the debate in Manchester on February 6. You could actually see the market moving during the debate in real time, every time he spoke. By the morning after, his nomination chances had fallen from 58 percent to 42 percent, his presidency chances from 26 percent to 20. By the day after his fifth-place showing in New Hampshire—four days after the debate—his chances had plummeted to 20 percent for the nomination and 10 percent for the presidency, where they’ve remained for the last week.

Rubio was my only losing bet last week. One day before the debate disaster, I put $200 on Rubio to win New Hampshire—shockingly bad timing.

He’s currently given a paltry 3 percent chance of winning South Carolina and 6 percent for Nevada—both states in which he’s seen a free fall in the markets after reportedly having strong ground games there The South Carolina and Nevada markets were barely active before New Hampshire, so it was hard to tell how accurate the market’s assessment really was. But as soon as the markets recently did become active, Rubio’s numbers began to fall.

2. Kasich and Bush on the upswing

Who are the beneficiaries of Rubio’s decline? Kasich has seen movement after his second place finish in New Hampshire. At the beginning of the race, I put a tiny bet on Kasich to win the presidency—150 dollars at 0.4 percent, which would hypothetically yield $36,000 if he were to win the whole thing. After Kasich’s second place finish in the Granite State, his odds for the nomination inched upward to 2 percent. Sure, he doesn’t have a prayer, but I have a nice position if his odds inch upward even further.

Another interesting trend, one that I profoundly disagree with, is the market’s slight movement in favor of Jeb Bush. The market has long been biased to Bush—for name recognition reasons, I suspect. Bush got 11 percent in the New Hampshire results, coming in fourth, and declared victory. He came out of Iowa at 6 percent for the nomination, and shot up to 14 percent the day after New Hampshire. For the presidency, his chances went from 2 to 7 percent.

`Neither Kasich nor Bush is given a realistic chance by the South Carolina market, which is dominated by Trump at 85 percent. (Cruz is at 9 percent; Marco is at 3; Kasich and Bush both less than 1 percent.)

3. Trump is ascendant (with a little help from Marco—and a lot of help from New Hampshire)

Trump is now a favorite again for the nomination, rated at 45 percent—not quite fully recovered from his 52 percent peak just before Iowa, but a long way from his 16 percent trough in the days after. He’s also at 16 percent for the presidency, back in the lead for the Republicans. It started with Rubio’s New Hampshire debate implosion: Pre-debate, Trump clocked in at 22 percent for the nomination and 7 percent for the presidency. Immediately after the Manchester debate, his chances bounced up to 28 percent for the nomination and 10 percent for the presidency, and both numbers have been trending upward ever since.

The South Carolina market has also clearly been affected by Trump’s win. Trump went from about 47 percent in the market for South Carolina to 70 percent immediately after New Hampshire. In the last week, he’s risen to 80 percent. In Nevada, Trump is rated around 75 percent. In fact, Trump is so dominant in these states that there is a new spinoff betting market essentially devoted to who will second place in South Carolina and Nevada—which is the market’s way of saying, “With Trump involved, this is too boring—let’s spice things up a bit.”

Nevertheless, I still think it’s too early to make a bet. I've not played in either the Nevada or South Carolina markets yet.

So Trump is back, but my position hasn’t changed—I think his unfavorables are too high, and he’s too vulnerable from the right on his positions. After Iowa, Trump’s rating dramatically fell—the market was convinced that he couldn’t drive turnout. In a post-New Hampshire reality, however, I must acknowledge that story is turned on its head—I thought he would garner support in the mid-20s in the Granite State, and instead he clocked in at 34 percent. You may have had a number of candidates declaring victory after essentially getting thrashed in New Hampshire, but the numbers don’t lie, then or since: Trump is the big winner.

4. The Trump v. Cruz race begins

My biggest reason not to take a position on Trump is that I already have a major position on the candidate who has now become his main rival: Ted Cruz. And I still like Cruz’s odds. My major new bet is that I recently doubled down on Ted Cruz, putting another $1,000 on him to win the nomination at a 12.5 percent chance. If his stock rises, I will cash out some of this position.

Now the real race begins: Trump versus Cruz. These are the only two candidates polling consistently at the top in a variety of Southern states—and the South is where the campaign is headed. In South Carolina, the market strongly favors Trump, and the early polls do as well: Trump leads in a new poll with 34.5 percent, with Cruz in second at 15.5 percent. But the campaigning is only beginning to heat up. One interesting factor will be Nikki Haley. She hasn’t endorsed but her rhetoric seems to favor Ted Cruz. Her comments after the State of the Union were clearly hostile towards both Trump and Rubio, whom she labeled “pro-amnesty.” That’s something to keep an eye on, and I think the markets will, too.

Early polls in Nevada also suggest Cruz is the biggest threat to Trump there, but it’s too early to make a definitive judgment on that race. We need to see how the campaigning and results pan out in South Carolina first. My long term position on Cruz—the center of my betting strategy in 2016—is enhanced every time he slams Trump on his conservative credentials, which is how the campaigning is playing out so far in South Carolina.

Whatever happens in Nevada, the race still turns to the South, and Cruz can put himself in a major new position with a big win on Super Tuesday, especially with wins in Texas, Arkansas, Tennessee. These are all places where Cruz reportedly has an effective ground game.

One interesting note: Since 2001, the day after New Hampshire, each candidate who led the Betfair market for the nomination went on to win the nomination. That would indicate a Trump and Clinton race. But I’m ready to throw the trends out the window in this cycle.

5. The market isn’t impressed by Sanders

Nothing has really moved in the Democratic market, even after Sanders’ big win in New Hampshire. Clinton remains just under 80 percent to win the nomination and 50 percent for the presidency. Before New Hampshire, Sanders was around 7 percent to win the presidency, and he’s inched up to about 10 percent now, so a bit of a nudge there. But ultimately the market isn’t going wild over Sanders because the results in New Hampshire were exactly as expected.

Still, I put a new bet on Sanders just before the primary, so his win is good news for me. I already had a substantial risk-free position on Sanders—$750 to win the presidency at 4 percent, which I covered in just 5 days when his odds enhanced dramatically—a position that would now net just shy of $10,000. A few days before the primary, I put a further $500 on Sanders at 7 percent. Then as the New Hampshire results were coming in, I sold back $1,500 at 10 percent, thus taking $1,000 profit out, while leaving an extra $2,350 available if he goes on to win. That $1000 profit made up for the $300 loss I took on Clinton last week after Iowa. So overall, on account of Sanders’ win, I've made $700 out of the Democrat pair.

The market heavily favors Clinton in South Carolina—giving her a 93 percent chance, compared to Sanders’ 7 percent. That will likely be Clinton’s version of New Hampshire: a clear win that the market will predict accurately. It won’t change things much for either candidates’ odds.

The more interesting race to watch is Nevada, and whether Sanders can sustain his recent momentum. Clinton’s odds have been falling steadily there since the market opened at nearly 90 percent for her; now her chances are at just under 60 percent. Sanders, similarly, has been rising, and the market gives him around a 43 percent chance. In many ways, Nevada is the first primary that actually looks like the Democratic Party: very diverse, tough economic problems, no clear advantage for either candidate.

6. Bloomberg inches upward

Just last week—the day before the New Hampshire Primary, in fact—Bloomberg finally went on the record: In an interview with the Financial Times, the former New York mayor said he was thinking about a presidential run. New Hampshire’s results make it slightly more likely that he’ll get in the race: Every race that Trump and Sanders win increases the chances they’ll be the nominees, opening up the gap for a moderate third-party candidate. Bloomberg’s price has doubled from 1.5 percent for the presidency before New Hampshire to about 3 percent now. But we’re still waiting. So much for Bloomberg’s numbers hinges on the Clinton-Sanders race. If Sanders starts to gain momentum, you’d see the market move higher for Bloomberg.